Phase One Trade Deal Reached, Conservatives Win Parliament, Global Markets Surge

Global markets surge after Christmas comes early to Wall Street, there is a Phase One Trade Deal in-principal.
Thomas Hughes

The U.S. Futures Are Up In Early Trading

The U.S. futures are indicating a positive open and the extension of Thursday’s rally. The move is driven by a trifecta of good news that alleviates much of the uncertainty plaguing Wall Street today. On Wednesday, the FOMC kicked off the rally by signaling no policy changes for at least a year. That sentiment was compounded by Thursday’s news a Phase One Trade Deal had been reached. The cherry topping this confection of good news is the Conservative win in the UK Parliament. The Dow Jones Industrial Average, S&P 500, and NASDAQ Composite are all up about 0.35% in the pre-opening session.

On the trade front, the U.S. and China have reached a Phase One Deal “in principle”. The deal is expected to remove the threat of future tariffs as well as the rollback of some existing tariffs. At last report, President Donald Trump had signed off on the proposal, the ball is now in China’s court. The Chinese Ambassador to Washington is qualified to sign the deal-in-principle but there is no word yet on when or if he will.

On the economic front, U.S. retail sales rose less than expected. The headline figure of 0.2% was far shy of the 0.5% expected by economists. The previous month was revised higher but only by a tenth. the news raises questions about Holiday spending despite signs of strength over the Black Friday/Cyber Monday weekend.

EU Markets Surge On Trade, Brexit News

The EU indices are surging at midday on Friday following the trade and Brexit news. The DAX and CAC are both up about 1.25% while the UK FTSE 100 leads with an advance of 1.80%. The Conservative Party win of Parliament all but assures Johnson’s Brexit plan will move forward. U.S. President Donald Trump hailed the victory as a win for the UK and U.S. because now the two nations can move forward with their own “really great” trade deal.

In stock news, all sectors are moving higher with notable strength in Travel, Retail, Basic Resources, and Financials. Travel stocks led the advance with a gain of 4.1% while Financials and Basic Resources lagged with gains of only 3%. UK stocks are the most active at midday on Friday but all bourses and sectors are in the green.

Asian Markets Cheer Trade Deal, Christmas Came Early

Asian markets cheered the Phase One Trade Deal even though we’ve heard the news before. It was only last month the two sides were headed to a signing that was derailed. The Hong Kong Hang Seng and Japanese Nikkei are in the lead at the end of the session with gains of 2.6% and 2.55%. The Australian ASX is the laggard today, it rose a mere 0.46%. In stock news, shares of Tencent, HSBC, Fast Retailing, and SK Hynix are all up at least 3.0%. SK Hynix leads at 5.4%.

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