Trade Talks Begin, EU Equities Stage Rebound, Earnings Boost Futures In US

US futures point to a big gain at the open for the broad equities market. European equities staged a rebound in early Wednesday trading although gains were not universal. Equity indices in Asia were mixed on Wednesday as traders await the outcome of high-level trade talks in Washington.
Thomas Hughes
Wall Street Vintage

Asian Markets Close Mixed As Trade Talks Begin

Equity indices in Asia were mixed on Wednesday as traders await the outcome of high-level trade talks in Washington. The talks, between Chinese Vice Premier Liu He and D.C.’s top negotiators, begins today and is expected to last two days. There is little expectation the talks will result in a major breakthrough but the consensus is that some progress will be made. US Economic Advisor Larry Kudlow and Secretary of the Treasury Steve Mnuchin are both optimistic about the meeting.

The Shanghai Composite posted the largest loss on Wednesday down more than -0.72% at the close. The Nikkei was the only other index to post losses and fell a little more than -0.50%. In Hong Kong, the Heng Seng Index closed with a small gain, about 0.40%, after trading significantly higher during the earlier portion of the session.

The Korean Kospi posted the largest gain despite mixed trading at the sector level. Shares of LG Display, maker of smartphone screens among other high-end tech products, were among the biggest losers after announcing Q1 shipments would be weaker than first expected. In Australia trading was equally mixed at the sector level but the broad ASX Index was able to close with a small gain. The materials sector led advancing sectors and was in turn led by an average 4% increase in mining stocks.

European Equities Stage A Rebound

European equities staged a rebound in early Wednesday trading although gains were not universal. The German DAX was the only to post losses, about -0.40% in the early morning session, while the FTSE and CAC were both trading higher.

The FTSE 100 was leading the advancing issues with a gain near 1.60% boosted by positive lending data. Three economic indicators including mortgage apps, mortgage lending, and net-lending suggest UK housing and business investment is still strong despite Brexit uncertainty.

Shares of French IT services company Atos were among the top-movers in Europe. The company announced it would be rewarding shareholders with nearly 25% of its publicly listed subsidiary Worldline SA. Worldline SA is an electronic payment and money transfer services provider.

US Futures Point To Big Gains At The Open

US futures point to a big gain at the open for the broad equities market. The move was driven by stronger than expected earnings from tech-giant Apple and industrial behemoth Boeing. The tech-heavy NASDAQ Composite and blue-chip Dow Jones Industrials were both up nearly 1.0% in the early pre-opening session, the broader S&P 500 was up a more modest 0.40%.

In earnings news, Apple reported after the bell on Tuesday and pleased investors with the news. The market had been expecting the consumer products maker to miss expectations and provide weak guidance due to slowing global economic activity and the US/China trade war; the company beat top and bottom line consensus and provided weakened but better than expected guidance. Boeing reported record-setting quarterly earnings and a “robust” back-log or orders that will drive future results.

Today’s action will be driven by earnings news as well as the FOMC and trade. The FOMC is set to announce its latest policy meeting today at 19:00 GMT.

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