Markets Rise In 2020, Trade Deal Still In Focus, China Manufacturing ExpandsGlobal markets start the New Year with gains but traders are cautioned not to expect too much in 2020.
The U.S. Futures Are Up On The First Trading Day Of 2020
The U.S. futures are up on the first trading day of 2020. The Dow Jones Industrial Average, S&P 500, and NASDAQ Composite are up 0.55% to 0.75% in the premarket session. The move is driven by momentum and hope the Phase One Trade Deal will be signed soon. According to reports from Washington, Chinese officials will be in Washington the second full week of January to do just that. Trump has also indicated he will be traveling to China to visit with Xi Jinping once the Phase Two negotiations get underway. Despite the optimism, there is still come concern due to a lack of clarity on the Phase One details. The risk for markets is the deal will fall short of hopes.
In stock news, shares of Ford are moving lower in early trading. The iconic car-maker was downgraded by Evercore ISI based on its high valuation and limited upside potential. Shares of Tesla are moving higher in early trading. The electric car maker says it will start the second round of deliveries from its Shanghai facility soon. Tesla also received an upgrade from Cannacord Genuity that came with a Wall Street-High price target.
On the economic front, initial jobless claims came in at 224,000. This is 2,000 more than expected and on top of an upward revision to the previous week. The previous week’s data was revised up by 2,000 but remains within trend at near the historic lows set last year.
Europe Moves Higher On Trade Hopes
European markets are moving higher on trade hopes despite weak economic data. The French CAC is in the lead at midday with a gain of 1.35% while the FTSE and DAX trade just shy of +1.0%. The banks are in the lead with an average gain of 1.9%, German banks lead the group with gains between 5% and 6%. On the economic front, EU manufacturing PMI shows the 11th straight month of contraction.
In stock news, Airbus became the world’s largest airplane maker in 2019 due to Boeing’s issues with the 737-Max. With the 737-Max issues far from resolved it is clear Airbus will be the winner in 2020 as well. Shares of Tullow Oil are down more than -6.5% in early trading. The struggling energy company released disappointing results for its Carapa-1 well.
Asia Starts New Year With Mixed Results
Asian markets started the New Year with mixed results. Most markets are higher at the end of the first trading day of the year, South Korea’s Kospi index is the only to post a loss and that -1.02%. The Japanese Nikkie is closed for a holiday. Elsewhere in the region, markets advanced 0.10% (the ASX) to 1.25% (China’s Shanghai Composite). In China, the Caixin Manufacturing PMI came in at 51.5 for December showing expansion in the economy. The data is good but slower than the previous month and slightly below expectations.