The U.S. Market Rebounds, China Soothes Trade Fears, Recession Fears LingerU.S. futures rebound on calming rhetoric from China and better than expected economic data.
The U.S. Futures Are Higher In Early Thursday Trading
The U.S. futures are up in early Thursday trading after soothing words from China. China says it wants to calmly reach an agreement with the U.S. on trade. The comments led the market to believe China may not retaliate with new tariffs next week. The U.S. is still expected to increase tariffs on $300 billion worth of Chinese goods another 5% on Sunday.
The Dow Jones Industrial Average is up about 1.05% on the news as global bellwethers Caterpillar and Boeing each advance more than 1.0%. The S&P 500 is up about 1.0% while the NASDAQ Composite is up 1.25%. Shares of Micron Technology are among today’s leaders. The chip-maker is up 2.0% on easing trade war tensions.
In economic news, today’s data was stronger than expected and alleviate the need for future FOMC rate cuts. The 2nd quarter GDP was revised lower by 0.1% but less than expected. Within the report, consumption and labor figures were revised higher. The initial claims data was also good, claims rose less than expected and are hovering near historic lows. The trade balance came in at $72 billion in the first estimate for August, less than expected. In retail, retail inventories rose 0.8% and will be a boost to GDP in the 3rd quarter.
EU Markets Reverse Early Losses
EU markets were down in the earliest part of Thursday’s session as recession fears gripped traders. The yield-curve inversion in U.S. treasuries briefly deepened on Wednesday stoking fears of imminent economic contraction. Early losses were reversed by midday following the news from China and weaker than expected inflation data. The inflation data is not bullish in and of itself but it does point to ECB policy stimulus at the meeting next month.
The French CAC is in the lead with a gain of 1.50%. The German DAX is up 1.2% while the UK FTSE is up 1.05%. Construction and materials are among the leaders, each of those sectors is up more than 0.80%. In stock news, UK tech company Microfocus is at the bottom of today’s rankings. The company lowered its full-year guidance substantially and sent the stock down more than -30.0%.
Asian Markets Closed Mixed On Thursday
The Asian markets closed mixed at the end of Thursday’s session on growing concerns of a global recession. The Hang Seng led advancers with a gain of 0.35%, the Kospi decliners with a loss of -0.40%, while most others closed within +/-0.10% of break-even. In China, the yuan briefly fell to a new low of 7.17 versus the dollar.