Rebound Runs Out, Weak Data Weighs On Sentiment, Trade Fears Simmer

The U.S. Equities Are Lower After Tuesday’s Rebound

The U.S. equities futures are pointing to a lower opening following Tuesday’s rebound. Tuesday’s action recovered about half the Monday losses but those gains were halved by the close of trading. Market action may be stabilizing above 2,800 for the S&P 500 but traders should be prepared for further downside. The Dow Jones Industrials, the S&P 500, and NASDAQ Composite are all down about -0.40% in early trading and may move lower during the session.

In trade news, all hope is not lost. In a series of Tweets yesterday and today President Trump let it be known the talks had not collapsed. He says the U.S. and China are having a little squabble and that we’ll know if a deal can be reached in a couple of weeks. He also says the U.S. is now in a far better position to deal with China now that they’ve backed out of their deal. The next opportunity and most likely time for a deal to be struck are at the G20 meeting in Japan.

In economic news, Retail Sales were much weaker than expected. Retail Sales fell -0.2% for the month versus a gain of 0.2% expected. The weakness is unexpected following March’s surge and strength within the labor market. On a YOY basis sales are also weak, up only 0.2% headline and 0.1% at the core level. Meanwhile, sales at Macy’s were as expected in the first quarter. What was not expected was a boost to EPS driven by a 0.7% increase in comps and cost-saving benefits. Shares are up 4.0% in early trading.

Weak Data Weighs On EU Markets

A round of lackluster, mixed economic data helped drive EU markets lower in early Wednesday trading. Data includes a raft of reports from member nations and the EU itself, all of which is more or less as expected and none of which indicates a change to underlying conditions. Most notably is EU GDP which came in as expected in the MOM and YOY comparisons. GDP rose 0.4% for the month and 1.2% over the last year equalling growth in the previous quarter. The DAX led the losses with a decline of -0.70% while the French CAC trailed at -0.50%. The UK FTSE was not hit so hard, it is down only -0.05% at midday.

In stock news shares of Credit Agricole fell -2.6% after it missed earnings expectations. The bank says EPS fell -11% from last year. Commerzbank saw its shares move higher after it received word another major EU bank was mulling a takeover bid. In political news, Theresa May is expected to re-introduce her Brexit deal to the Parliament in early June.

Asia Moves Higher But Trade Fears Simmer

Asian markets were broadly higher following the rebound on Wall Street. The Shanghai Composite led the advance with a gain of 1.91% and was by far the best performer. The Australian ASX advanced about 0.70% while the Nikkei, Hong Kong Hang Seng, and Korean Kospi all gained about a half percent.

Newly released economic data from China shows economic activity continues to expand but at the lowest levels since early 2003. Both Industrial Production and Retail Sales came in below expectations and point to further trouble for China’s Central Planning Committee.