The FOMC, Earnings Growth, And Trade Talks

The US markets were flat in early Thursday trading despite a trifecta of good news. In Europe, the DAX was the only major index to post a loss at midday and that was small, only -0.35%.
Thomas Hughes
Wall Street

Asian Markets Were Mixed On Weak Chinese Manufacturing Data

Asian markets were mixed on Thursday following a weak read on Chinese PMI. The official Chinese Manufacturing PMI came in at 49.5, slightly below the 50 level which indicates expansion for the second month in a row. The good news is the read is slightly better than expected and up a tenth from the previous month suggesting the lull in activity is only temporary.

The Hong Kong Heng Seng led markets in the region with an advance of 1.08%. The Japanese Nikkei was runner up with a gain of 1.00%, the Shanghai Composite lagged advancing markets with a modest rise of 0.35%. Australia’s ASX and the Korean Kospi were the only indices to close with losses and those were marginal at best, -0.37% and -0.06% respectively.

News from the US helped support the market. The FOMC announced yesterday they were patient regarding the pace and trajectory of interest rate hikes, confirming what the market had already begun to expect. The committee also says they will operate with a substantial balance sheet which the market took as sign the FOMC was close to ending the balance sheet runoff, otherwise known as quantitative tightening.

European Bourses Mixed On Brexit Woe

European markets were mixed as Brexit woe and growth concerns weigh on sentiment. Yesterday the EU Governing Council told the UK there would be no more renegotiation on Brexit despite Parliaments desire to do so. The news is another blow to the Brexit process and brings the UK one step closer to a hard exit, an exit with no deals, from the European Union.

The DAX was the only major index to post a loss at midday and that was small, only -0.35%. The UK FTSE surprisingly enough was in the lead with a gain near 0.50%. French CAC split the difference to trade near break-even for the day. Unilever and Swatch were both top of the loser’s list with declines exceeding -3.0% and -6.0% respectively. The drops were due to weaker than expected earnings and a poor outlook for 2019.

US Markets Flat In Early Trading

The US markets were flat in early Thursday trading despite a trifecta of good news. The news includes the FOMC and blow-out earnings from two of FAANG’s most heavily traded stocks as well as word on trade. A breaking story has emerged suggesting trade talks had progressed to the point a meeting between Trump and Xi was in the works. The meeting, tentatively scheduled for late February, is dependent on certain concessions that have yet to be revealed.

In earnings news shares of Facebook were up more than 6.0% in early trading on its report delivered after the closing bell on Wednesday. The company is the second member of FAANG to beat expectations and suggests the bearish market outlook that has been building up is overblown. Amazon is set to report today after the close along with another hand full of S&P 500 companies. Shares of its stock were up nearly 2.0% in early morning action.

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