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A Weak US Drags On Global Markets

Asian indices were down across the board in the wake of Tuesday’s broad sell-off in the US equities market. The sell-off was driven by two factors that combined to produce a wave of risk-off trading; rising trade fears and falling interest rates. The Heng Seng led the decline in Asia with a loss of -1.62% but losses in other markets were more modest.

Australian stocks shed an average -0.78% after the latest GDP figures were released. The data shows Australia’s economy continues to grow but at a slower rate than before and well below expectations. The 0.3% growth posted for the 3rd quarter is half the expectation and brought the YOY figure down to 2.8% and a half percent below consensus.

In China, the Ministry of Commerce says the Trump/Xi meeting was a success. They are pushing forward with plans to solidify the trade agreement over the next 90 days despite fears to the contrary. On the economic front, China’s Caixin Services PMI surged three points to 53.8. This is the highest level in five months and a sign China’s economy is still strong.


Retail Sales Fail To Lift EU Indices

The EU indices were down in Wednesday trading as trade fears outshine strong data. The construction and materials sectors were leading at midday with a loss near -2.0%. The UK FTSE led the indices with a loss near -1.0% but the others were not far behind. The DAX was trading with a loss near -0.80%, the CAC with a loss near -0.90%, despite stronger than expected retail sales. UK markets were under additional pressure as Brexit-related politics flare up.

EU retail sales rose 0.3% in the last month, better than the 0.2% expected, and much better than the downwardly revised -0.5% reported for the previous month. The bad news is that on a year over year basis sales are only up 1.7% versus the expected 2.3%. The weak YOY figure is balanced out by the Composite PMI reading which came in at 52.7 and 0.3% above estimates.

US Markets Closed For Mourning

In the US, most markets were closed in mourning for fallen-President George H.W. Bush. The President is remembered as one of the better in US history and a man of great character.

The market closure also means most data scheduled for today will come out tomorrow which makes Thursday a high-impact day for traders. The schedule includes key labor data, services ISM, and factory orders. Futures trading indicates a positive open on Thursday but that could change at a moments notice. Fear of trade-war is still present and close to the surface, any negative headline relating to trade conflict with China could be the spark to get equities moving lower again.

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