Markets Pause As Brexit Fears Resurface, German Business Climate Improves, Imports Plunge In Japan

The U.S. Futures Are Flat In Early Wednesday Trading

The U.S. futures are indicating a flat open for the major equity indices on Wednesday. The market is taking a breather after posting fresh all-time highs on Tuesday, digesting the news a hard-Brexit is back on the table. Boris Johnson’s Conservative Government is trying to make it illegal to extend the December 2020 deadline for final Brexit negotiations. To be clear, the soft-Brexit expected in January is only the first of a two-step process. Now the initial deal is done the initial separation of the UK from the EU can take place. Once the UK is separated from the EU it will be able to negotiate new trade deals with the EU and whoever else it wants.

The U.S. futures are all indicating an open near 0.05% in early trading with the NASDAQ Composite in the lead. In stock news, shares of FedEx are down more than -7.0% after the company reported earnings. FedEx delivered weaker than expected revenue and provided soft guidance for the remainder of the year. Shares of General Mills are up more than 1.5% after it reported earnings. The company beat expectations on strength in the pet segment. In economic news, Fannie Mae upgraded its outlook for 2020 housing activity. The upgrade has been labeled “significant” and calls for a 10% acceleration in YOY single-family housing starts.

EU Markets Are Mixed Despite Some Improvements In The Data

EU markets are mixed at midday on Wednesday despite an improvement in economic activity. The German Business Climate Index improved more than expected as did EU-level inflation. EU-level consumer prices advanced 1.0% YOY and up 0.3% from the previous month. The news is a good sign of stabilization within the EU economy but was only as-expected. The DAX is down the most in early trading, about -0.27%, while the FTSE and CAC are hugging break-even levels.

In stock news, shares of travel and leisure stocks are leading the declining issues with a loss of -0.40%. At the other end of the spectrum, the Energy sector is leading advancing issues with a gain near 0.50%. Fiat-Chrysler and Pugeot PSA are both on the move after announcing a binding agreement to merge. The deal will make the world’s 4th largest automaker.

Asian Market Mixed, Japan Falls On Trade Data

The Asian markets are mixed on Wednesday. Japan’s dismal trade data is to blame. The Nikkei led the decliners but still only posted a loss of -0.55%. In Japan, Exports fells -7.9% YOY and slightly less than expected while imports fell -15.7%. The import figure was the real shocker, falling more than 200 bps more than expected. The Shanghai Composite and Korean Kospi are also both lower at the end of Wednesday’s session but the losses were much smaller. The Hong Kong Hang Seng advanced 0.15% while the Australian ASX gained 0.06%.