Trade Hope Lifts Stocks, UK Delays Brexit, BOJ Holds Rates Steady

UK delays Brexit, China pledges support for the economy, renewed trade hopes lift markets.
Thomas Hughes

Trade Hopes Lift Stocks In The U.S.

U.S. futures trading indicated a positive open for the major indices has trade hopes are renewed. Reports reveal that Chinese Vice Premier Liu He spoke on the phone with Secretary of the Treasury Steve Mnuchin and U.S Trade Ambassador Robert Lighthizer to defuse tensions surrounding key issues.

According to those in the know, progress has been made and the two nations are still on track to reach a deal in the not too distant future. Markets had become anxious on Thursday following word that the Trump/Xi Mar-a-Lago summit had been postponed. In Trump’s words, we’ll know in the next four to five weeks if a deal can be made. The major indices were all looking at an open roughly 0.50% above Thursday’s close.

In economic news, the New York Manufacturing Survey paints a mixed picture of the economy. While business activity remains expansionary the survey reading came in at 3.7, just off the long-term low and down from the previous month. The reading shows expansion but at a low pace, slower than the previous month. The one bright spot in the report was a 10-point uptick in employment.

The UK Votes To Delay Brexit

EU markets were buoyed by news the UK Parliament had voted against a no-deal Brexit. The non-binding vote to avoid a no-deal Brexit may push back the Article 50 deadline three months or more but is reliant on EU approval. The EU has said the UK will need to provide suitable reasons for delaying the deadline, and that there will be no more negotiations, so it is unclear exactly what the UK intends to do now.

For her part, Prime Minister Theresa May is back at work seeking support for her now twice-defeated Brexit Deal. She has promised to bring it back before Parliament as early as next week. There are now just 14 days until the Article 50 deadline.

In stock news shares of travel company Dufry jumped 4.0% after reporting better than expected results. The company topped growth expectations, provided favorable guidance, and announced an increase to the dividend payment. Shares of Volkswagen were not so buoyant. That stock fell more than -1.0% after the U.S DOJ announced a lawsuit pertaining to the diesel emissions scandal. The DAX led the indices with a gain of 1.0% at midday followed by a 0.90% increase in the CAC and a 0.60% advance for the FTSE 100.

BOJ Holds Rates Steady, China Pledges Support For The Economy

In Asia equities markets were supported by two bits of news. The first is that the Bank of Japan held its policy rates unchanged. The BOJ says Japan can expect to see moderate expansion continue despite risks from the global economy. The Japanese Nikkei advanced 0.77% on the news.

In China Premier Li Kiquang says the government will remain supportive of the economy. This comes after industrial production data fell to its lowest level in nearly 20 years. The Shanghai and Shenzen Composites both gained more than 1.0% on the news while elsewhere in the region trading was more mixed. The Hong Kong Hang Seng gained about 0.50% while the Korean Kospi advanced close to 1.0% and the Australian ASX fell a tepid -0.07%.

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