Trade Hopes Lift Stocks, Brexit Deadline Extended, Chinese Inflation At 5 Month High

Trade hopes continue to support stocks while traders wait on the final deal, and the start of earnings season on Friday.
Thomas Hughes
The side entrance of New York Stock Exchange, NYC

Trades Hope Is Supporting Equities Ahead Of Earnings

Trade hope is supporting equities in early Thursday trading. The U.S. futures are pointing to a modestly higher open, about 40 points for the Dow and a comparably low figure for the S&P 500 and NASDAQ Composite. Hopes are driven by tantalizing evidence the U.S. and China are coming close to a trade deal. Yesterday, Steve Mnuchin said negotiators had basically agreed on an enforcement mechanism, a development pointing to a quick end to the talks.

The FOMC minutes are also helping to support indices. The minutes were mixed, some members think rate hikes are still coming, but the consensus is no more rate hikes this year. The committee is committed to its dual stance of patience and data dependency. They will patiently wait until the data tells them it is time to cut or hike rates again.

In economic news the PPI and jobless claims data were both better than expected. The PPI came in at 0.6% and double the consensus. On a YOY basis PPI is up 2.2% which is also above expectations and tops the FOMCs 2.0% target. This data shows a rebound in the economy forecast by the FOMC and helped strengthen the dollar.

Brexit Deadline Extended, EU Markets Get Reprieve

Theresa May and the UK got a reprieve from the EU late yesterday. The EU has granted a flexible 6-month extension to the Brexit deadline staving off a potentially market-shaking hard-Brexit. The extension comes with an admonishment from the EU; use this time wisely. EU markets responded with a sigh of relief but the news was not enough to spark a rally. The FTSE 100 was trading near flat at midday while the DAX and CAC were both showing modest to moderate gains.

Traders are cautious if hopeful after yesterday’s ECB meeting. The ECB held rates steady but reinforced its newly dovish stance citing increased downside risks to the economy. The bank will continue with its TLTR-III plans and may increase those facilities if needed.

Asia Mixed After Chinese CPI Hits 5 Month High

Asian markets were wildly mixed on Thursday with a definite bearish bias. The Japanese Nikkei posted the only advance and that was a slim 0.11%. Shares of Fast Retailing did most of the heavy lifting but it rose only 0.50%. The Korean Kospi was unchanged while shared in Australia, Hong Kong, and mainland China all fell. Australia made the smallest decline at -0.40% while the Hong Kong Hang Seng shed -0.93% and the Shanghai Composite dropped -1.60%.

Chinese consumer inflation rose 0.4% in the last month and is up 2.3% over last year. This is the highest level in 5 months but slightly below expectations. The rise is driven by a seasonal rise in vegetable prices as higher prices for pork. Chinse farmers are culling their pigs in an attempt to control the spread of fever. The food index rose 4.1%

Don't miss a thing!

Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.