Trade Fears Resurface, No-Deal Brexit Is Off The Table, China Industrial Output Falls In February

No-Deal Brexit is off the table, at least that’s what the UK says, but it may not matter. If the EU doesn’t agree the UK may have no choice.
Thomas Hughes
Cargo containers with Chinese and United States flag

The U.S. Markets Are Mixed In Early Trading

The U.S. futures markets indicated a flat and mixed open for equities on Thursday morning. Investors are growing more cautious in the face of renewed and growing fear of geopolitical issues and slowing economic growth. In trade news, there is sign a trade deal is further off than first anticipated. While momentum in negotiations is still strong the latest reports say China and the White House have pushed off the Trump/Xi meeting until at least April. While not a sign talks are breaking down it does reinforce the fact there is still a big divide between the two sides.

In stock news shares of GE moved sharply lower in early trading after the company issued full-year guidance. The ailing multinational mega-conglomerate says adjusted earnings will be between $0.50 and $0.60 per share, nearly 30% below consensus estimates. Shares of the stock shed more than -4.0% in the wake of the release but bottom-fishers were there ready to scoop up shares. By 8:30 AM the loss was recovered and shares were moving higher.

On the economic front, jobless claims ticked slightly higher but are otherwise as expected. Import and export prices both moved modestly higher over the last month beating expectations. Import and Export prices both advanced 0.6%, import prices 0.3% stronger than expected and export prices 0.5% stronger than expected.

A No-Deal Brexit Is Off The Table

The UK Parliament has voted against a no-deal or hard-Brexit at any time. The vote carries serious repercussions as it undermines Theresa May’s authority and may not matter in the end. The EU has said on multiple occasions there will be no more renegotiation which puts the UK on shaky ground. The Parliament will now vote on extending Article 50 but even that relies on EU agreement. If they don’t agree the UK may have no choices left other than hard-Brexit or no-Brexit. With the March 29 deadline fast approaching it looks like the market could be in for a wild ride.

EU markets were up in early Thursday trading despite the political and economic uncertainty sweeping the globe. The UK FTSE 100 led with a gain near 0.65% while the French CAC was close behind. The German DAX was weakest with a gain near 0.15%.

Asian Markets Were Mixed; Trade, Brexit, Data In Focus

Asian markets were mixed on Thursday following the UK no-deal Brexit vote. Chinese stocks led the decline and were further pressured by weak economic data. Industrial output in China fell to a 17-year low in February as trade tensions and slowing global economies cut into growth. The silver lining is that retails sales and fixed-asset investing were both up and stronger than expected. The mainland Chinese Shanghai Composite closed with a loss of -1.20% with the small-cap Shenzen component down more than -2.3%.

Elsewhere in the region trading was less volatile. The Japanese Nikkei is the only other index to close with a loss and that was only -0.02%. The Hang Seng, Australian ASX, and Korean Kospi were all able to post small gains.

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