Weak Data Slams Stocks, Johnson-Backed Brexit Deal To Be Rejected, U.S./China Trade Talks Are Next Week

Global markets retreat as recession fears reemerge to cloud the outlook for corporate earnings.
Thomas Hughes

The U.S. Indices Are Down On Weak Data

The U.S. futures are down in early trading as weak data slams the market. Yesterday’s ISM Manufacturing data set the stage for possible U.S. recession. Today’s ADP confirms a general slow-down in the labor markets. Traders are cautioned not to read too much into the data, manufacturing is only 10% of the entire U.S. economy and labor markets remain healthy. The Dow Jones Industrial Average, S&P 500 and NASDAQ Composite are all down about -0.45% in the premarket session.

In stock news, shares of FAANG stocks are down -0.75% to -1.0% while Caterpillar and Union Pacific are both down slightly more than -1.0%. In economic news, on Tuesday the ISM Manufacturing data showed U.S. manufacturing contracted and at a 10 year low. Headline ISM came in at 47.8 with the employment component edging down 1.1% to 46.3. In today’s news, the ADP Employment data shows U.S. job gains are steady but not robust. ADP came in at 135,000 versus an expectation for 150,000. The September ADP figure was revised lower to 157,000, regardless the figure job creation is positive and labor markets remain tight.

EU Markets Slammed By Politics And Economics

The EU markets are down hard at midday on Wednesday after a round of weak data and less-than-positive news on the Brexit front. In economics, the U.S. manufacturing data is a sign that current trade policies and the uncertainty around them is hurting business. German GDP estimates were revised lower today, to 1.1% from 1.8%, and the same is likely in the U.S. as well. The caveat for traders is that, while GDP estimates are in decline they are still positive.

The German DAX is down about -1.35% at midday with the CAX a little lower with a loss near -1.75%. The UK FTSE is in the lead with a decline of -2.25% driven by mounting certainty there will be a hard-Brexit. PM Boris Johnson is expected to deliver his proposal for a clean Brexit today. The bad news is the EU is expected to reject it if presented in the form leaked to the press.

In stock news, shares of Grenke are up more than 6% after reporting its 9-month update. Shares of Carl Zeiss Meditec are up 4.4% after the company raised guidance.

Asia Moves Lower, Recession Fears Grip The Market

Most Asian markets shed a  minimum of -.05% in Wednesday trading. The Korean Kospi led the losses with a decline of -1.95% followed by the ASX -1.50%. Japan shed only -0.50%. China and Hong Kong are closed. The focus is on data from around the world. The latest from the U.S., that reveals slowing in the global economy. Hopes are pinned to trade talks that are expected to resume next week. No deal is expected but there may be a positive development, we’ll see.

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