U.S. Indices Lower On Earnings, Weak PMI Drags On The EU, Trade Hopes Lift Asia

The U.S. Futures Are Lower On Results And Outlook

The U.S. futures are moving lower in early Wednesday trading as a round of important earnings results fail to inspire bullish behavior. The NASDAQ Composite is today’s leader with a loss of -0.40%, the Dow Industrials and S&P 500 are both close behind. The move is led by Boeing and Caterpillar which both reported weaker than expected revenue and EPS.

The tech sector, specifically the FAANG names, are also moving lower after the DOJ announced a probe into competitive practices. Adding to the turmoil, Secretary of the Treasury Steve Mnuchin says Amazon has destroyed the retail industry and the U.S. should look into its practices.

In trade news, Mnuchin says the U.S. is going to China next week. He and Trade Ambassador Robert Lighthizer are going to Beijing for the first face to face talks since the G-20. Mnuchin says there are still serious issues to be resolved. There is little expectation a deal will come next week. At best, traders might expect some positive news but nothing major in terms of progress. Markit flash PMI figures are due out at 9:45 AM, New Home Sales figures are due out at 10:00 AM.

Weak PMI Drags On EU Indices

Weaker than expected PMI readings from across the EU are dragging on the indices at midday. The DAX is the only index in the green despite Germany Industrial PMI contracting for another month. German Industrial PMI fell to 43.1 from 45.1 as demand for industrial products wanes. German and EU composite PMI’s are both positive due to expansion in the services sector all-EU Manufacturing PMI shows contraction is deepening.

The EU data is especially important today because the ECB is meeting right now. The Governing Council is expected to cut rates by another 0.10% tomorrow and this data supports that view. The ECB retreated from is hawkish bias over the last two months and is expected to introduce more stimulus in the near future as well. Mario Draghi steps down from his post as ECB President soon, Christine Lagarde is the heir-apparent.

In stock news, shares of Deutsche Bank fell nearly -3.0% after reporting weaker than expected results. The company said it suffered significant impairments due to its restructuring. In other news, the autos were leading with gains near 0.80%.

Asian Markets Up On Trade Hope

Asian markets are largely higher on trade hope. The renewed talks between the U.S. and China are a step in the right direction if not the end to the trade war. The Korean Kospi was the only index to move lower, it fell -0.91% on signs the dispute between South Korean and Japan is impacting profits. Shares of LG Display fell nearly -4.0% after it reported weaker than expected results citing the Japan/South Korea problem. The Shanghai Composite led the advance with a gain of 0.80%, the ASX was just behind at 0.77%. The Nikkei advanced 0.41%, the Hang Seng 0.205.