Stocks Falter, Trade Fear Flares Up, FOMC Announcement On TapThe FOMC statement is due out this afternoon and will move the market, one way or another.
Global Stocks Falter In Wake Of Conflicting Trade News
U.S. futures trading was indicating a flat open in early Wednesday trading following a round of conflicting trade news. Reports the Chinese are pushing back against U.S. demands compounded fears sparked last week. Word that the Trump/Xi meeting was moved out by at least a month signals the two sides are still a long way from reaching consensus.
On a more positive note, the White House says that Trade Ambassador Robert Lighthizer and Secretary of the Treasury Steve Mnuchin will be visiting Beijing next week. The trip is the 3rd round of high-level trade talks and may be a critical turning point for the negotiation.
Traders were also cautious because of today’s FOMC policy announcement. The announcement is due out at 2 PM, there is no expectation for policy change. What is expected is a reduced dot-plot forecast and information regarding the Fed’s balance sheet. The Federal Reserve balance sheet wind down has been credited with hampering economic activity, the FOMC has previously indicated an end to the wind-down was close at hand.
May Requests Article 50 Extension
Theresa May has submitted a formal request to extend the Article 50 deadline. The deadline is less than 10 days away, if the extension is not granted the UK will be facing a hard-Brexit. Parliament has voted not to accept a hard-Brexit so it is unclear what will happen next. The EU has repeatedly stated no renegotiation would be allowed.
The UK FTSE was leading the EU equities market at midday despite the impending Brexit but gains were microscopic. The French CAC was down about -0.10% on today’s news while the German DAX shed a more substantial -1.15%. German stocks were hurt by a round of bad news for top stocks Bayer and BMW. Bayer fell -12% after a U.S. court ruled Roundup was substantially to blame for causing a mans cancer. Shares of BMW fell more than -5.0% after revealing pretax profits would fall -10%.
Asia Mixed; Growth, Trade, FOMC In Focus
Asian markets were flat to down following Tuesday’s U.S. market reversal. The reversal was caused by rising trade fears that spilled over into Thursday’s session. The Hong Kong Hang Seng led the decline with a loss of -0.49% after trading much lower intraday. The Australian ASX was the second biggest loser, shedding -0.32%, while the Korean Kospi and Shanghai Composite both closed near break-even for the day.
In stock news, Chinese mobile phone maker Xaomi reported revenue and earnings better than expected. Shares of the stock fell -4.7% however because outlook fell short of consensus. Korean chip-maker SK Hynix was among today’s biggest gainers rising nearly 3.70%. In economic news, Asian Business Confidence held steady near 3-year lows as U.S./China trade relation drag on sentiment.