Markets Rebound On Retail Earnings, Geopolitics Simmer, FOMC Minutes In Focus

The U.S. Futures Move Higher After Strong Retail Earnings

The U.S. futures markets are indicating a higher open on Wednesday after a round of strong earnings from the retail sector. Earnings reports from Home Depot, Lowe’s, and Target were all better than expected and confirm strength in the U.S. consumer. U.S. consumer strength is driven by the labor markets which only one reason today’s FOMC minutes release is so important. Trader’s will be looking for conflicting signals; the market needs the minutes to support underlying economic health while at the same time indicating deeper interest rate cuts later this year.

The NASDAQ Composite is in the lead in the pre-market session with a gain of 0.76%. The broad market S&P 500 is runner up with an advance of 0.68% while the Dow Jones Industrial Average trails at +0.62%. The move is also supported by comments from President Trump. The President says he is considering a decrease in the payroll tax. A cut in the payroll tax makes it cheaper for employers to maintain workforces and make new hires.

In stock news, shares of Target are up more than 15% after a blow-out earnings report. The company reports better than expected comp sales, revenue, and EPS. Target also raised full-year guidance. Share’s of Lowe’s are showing similar strength after it smashed its estimates. Lowe’s is up about 12.0% in the pre-market just a day after competitor Home Depot reported mixed results.

EU Up Despite Simmering Geopolitical Issues

All of the EU indices and sectors are moving higher at midday on Wednesday as hopeful traders keep an eye on the FOMC. the French CAC is in the lead with a gain of 1.55% while the DAX and FTSE trail with gains closer to 1.10%. The DAX is close to forming a reversal signal but still faces major resistance at the 12,000 level, traders are warned to be cautious as geopolitical issues continue to simmer abroad and at home.

In Italy, the crisis in the government worsened overnight. Prime Minister Giuseppe Conte resigned forcing the President to begin immediate talks with his now-broken coalition partners. The vote of no-confidence is still in the works and may break Italy’s already fragile government. In Brexit news, UK PM Boris Johnson has been meeting with EU counterparts to no avail. He says they are “negative”, not a good sign the May Brexit deal will be renegotiated.

Asian Markets Are Mixed On Wednesday

The major Asian indices are mixed on Wednesday. The Hang Seng, Shanghai, and Kospi all posted small gains while the Nikkei and ASX posted losses. Australia shed the largest amount, nearly -1.0%, on weakness in the Big Four Banks. In stock news, autos declines -1.5% to -2.5%. Shares of Softbank fell -2.86%.