Phase One In The Bag, Retail Sales Rise, Traders Remain Cautious

The U.S. Futures Are Up

The U.S. futures are trading higher in early action signaling a modestly higher open for the indices. The tech-heavy NASDAQ Composite is in the lead with a gain of 0.35% while the S&P 500 and Dow Jones Industrial are close behind. The move is driven by relief the Phase One trade deal was signed. Gains are capped by uncertainty of what will happen over the next 12 months. The Phase One deal did not live up to the market’s expectations and may trigger a round of selling for the major stock indices.

What the trade deal solidifies is the terms of an uneasy truce struck last year. The truce will roll-back some tariffs but not all leaving China’s economy under pressure. China must now act on the terms in order to have other tariffs removed in the Phase Two deal. What traders need to consider now is if the Phase Two deal will end the trade war or open the door to Phase Three.

In stock news, Morgan Stanley beat on the top and bottom lines easily surpassing analyst’s expectations. Shares of the stock are up nearly 5.0% in early trading. Shares of XPO Logistics are up 20% in premarket action. The company announced the results of a strategic review that include sale of the company or partial-spinoffs to unlock shareholder value. Tesla’s shares are down almost -4.0%, the company received a downgrade from Morgan Stanley after California registrations halved.

EU Markets Edge Lower, Phase One Is Uninspiring

The EU markets are edging lower at midday as traders digest the Phase Trade Deal news. The deal alleviates much of the uncertainty plaguing the market but little else. The shackle of tariffs remains on China, the EU’s largest trading partner, so a strong economic rebound is unlikely this year. The UK FTSE 100 is in the lead in early trading, down about -0.45%, while the DAX and CAC are both down about -0.20%.

In stock news, shares of Airbus are holding steady after the company said demand was good enough to maintain its current production schedule. Investors became worried earlier this week after Boeing reported the first decline in orders in over 30 years. Shares of Pearson, and education company, are down -10% after results came in at the low end of guidance.

Asian Mostly Higher, Shanghai Moves Lower, Trade Deal In Focus

Asian markets are mostly higher at the end of the Thursday session. The Shanghai Composite is the only to post a loss and that in the range of -0.50%. The Phase One trade deal is a relief to traders around the region but uncertainties remain. The Nikkei advanced 0.07%, the Hang Seng 0.38%, the ASX 0.67%, and the Kospi 0.77%. Korea’s Samsung and Hyundai led the market with gains near 3.0%.