Volatile Markets Poised To Move Lower, Recession Fears Mount, China Vows Retaliation

Global markets are mixed and volatile in the wake of Thursday’s Wall Street selloff. Be ready for lower prices.
Thomas Hughes

The U.S. Futures Are Volatile In Early Trading

The U.S. markets were volatile in early Thursday trading. The broad market was indicated up modestly in the earliest portion of the electronic overnight session but fell fard on news from China. China’s Foreign Ministry says it must retaliate to the U.S. latest round of tariffs, the U.S. move violates a consensus reached by the two leaders.  The decline in stocks did not last long, however, as strong earnings from Walmart lifted spirits. Walmart says revenue and earnings are better than expected. Strong comps in the U.S. were driven by traffic and ticket averages which helped to send the stock up more than 6.0%.

A raft of economic data did not help soothe nerves in early trading. The data, including Retail Sales and two Federal Reserve survey’s of business conditions, was released at 8:30 AM and paints a generally bullish picture. Retail Sales were much better than expected at 0.7% headline and 1.0% core MOM. Jobless claims rose slightly but are holding relatively flat YOY. The Empire State and Philly Fed MBOS were both better than expected although there was some weakness in employment. Labor Costs for the 2nd quarter fell more than 50% from the 1st but came in a bit above expectations. The index futures gave up some of their gains to trade up near 0.25% afterward.

Recession Fears Mount In The EU

Yesterday’s yield-curve inversion in the U.S. coupled with weak GDP reads in the EU and Germany have stoked recession fears. The EU indices are lower at midday after a volatile morning and look like they will move lower. The UK FTSE is in the lead with a loss of -1.15% despite a pledge for free-trade from the U.S. in case of a hard-Brexit. The DAX is down a more modest -0.50% while the French CAC is hovering about -0.15% below break-even. Basic resources are in the lead but most sectors are moving lower.

In stock news, shares of Ica Gruppa are at the top of the rankings after reporting strong results. The stock is up more than 8.1%. Carlsberg, a beermaker, also reported strong results and saw its share move up more than 6.0%. At the opposite end of the spectrum, shares of insurer Aegon are down more than -7.0% after a CEO shakeup.

Asia Mixed After China Vows Retaliation

Asian indices closed mixed on Thursday following the steep -3.0% decline seen in the U.S. The ASX led decliners with a loss of -2.85% after weaker than expected unemployment figures. Unemployment figures held steady despite strong labor data in the last month. The Nikkei is also down sharply with a loss of -1.21% while others in the region closed higher. Hong Kong led advancers with a gain of 0.75% after slashing GDP forecasts and pledging stimulus.

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