Asia Mixed As Trade Concern Lingers, ECB Restimulates EU Economy, Huawei Sues U.S.

Asian Markets Mixed As Trade Concerns Linger

Asian markets were mixed in Thursday trading as lingering trade concerns weigh on sentiment. The lack of news over the past days has traders on edge as they try to anticipate the markets next move. The Hong Kong Hang Seng led losses with a decline of -0.89%.

The Japanese Nikkei posted the second largest decline, -0.65%, as fears of slowing in China sapped strength from the tech sector. Chip-heavyweight Renesas Electronics says it is cutting production at Japanese facilities for two months. The move is in anticipation of weaker Chinese Demand and shares fell more than -14.5%. Automation industry leader Fanuc also moved sharply lower and posted a loss of -2.80%. The Korean Kospi closed with a loss of -0.45% while the Shanghai Composite and Australian ASX were both able to make small advances.

ECB Holds Rates Steady, Announces Third Round Of QE

The ECB decided to hold rates steady at their policy meeting today. The move was as expected but came with some unexpected news. The EU central bank has lowered its targets for this year, pushed out its target date for rate hikes, and issued a third round of QE. The news was well taken by EU equity markets which were down in early Thursday trading but rebounded to post small gains after the news. The French CAC led with a gain near 0.25% and closely followed by the German DAX. The UK FTSE was hugging the flat-line as Brexit fears dampened the mood.

The ECB says it will provide a new round of funding for EU banks. The funding will come in the form of TLTRO-III and is intended to help EU banks with their lending. The ECB also pushed back the target date for the first interest rate hike until first quarter 2020 at the earliest. The bank had been indicating a hike as early as the third quarter this year. The ECB also lowered its 2019 GDP target to 1.1%, down a half percent, and cited mounting geopolitical worries. The EUR/USD fell a half percent on the news and is now sitting at a key support level.

U.S. Futures Flat After ECB Announcement, Huawei Goes To Court

The U.S. futures trading indicated a flat to positive open for the major indices in early Thursday trading. The broad-market S&P 500 led but the advance was only 0.10%. The ECB news was well received and help support indices that had been trading negative in the earliest portion of the electronic session. Markets are still concerned over the U.S./China trade deal, the longer we go with no news the worse it will be for the market.

In corporate news, Huawei, embattled Chinese tech-firm, has taken the U.S. to court. The company alleges the U.S. government has acted unconstitutionally by forbidding its companies to buy Huawei products. The claims is based on the principle of due process. Huawei says its rights were violated when the Trump administration singled them out in a ban on Chinese tech.

On the economic front, both weekly jobless claims and 4th quarter productivity were better than expected. The jobless claims figure came in at 223,000 and near long-term lows while productivity increase 1.9% in the 4th quarter. Analysts had been expecting 1.3%. The increase in productivity is good news for the economy because it shows wage gains are sustainable and not a threat to inflation.

Global Stocks Mixed, Trade Deal In Focus, Retail Earnings Surprise Wall Street

Asian Markets Were Mixed In Tuesday Trading

Asian markets were in Tuesday trading with mainland China in the lead. The Shanghai Composite closed the day with a gain of 0.88% with the Shenzen component advancing nearly 3.0%. The move comes as the Chinese Peoples Congress begins and Premier Li Keqiang issues a warning to the people. He says China faces a “though struggle” in the face of a “more complicated environment”. The warning comes with a downgrade to 2019 GDP but one fully expected by the market. China now expects to see official GDP figures come in between 6.0% and 6.5% for the year, the slowest pace of growth since 1990.

Elsewhere in the region trading was less buoyant as investors wait on trade-related news. In Hong Kong stocks were up a little more than 0.1% while most others closed with losses. The Japanese Nikkei shed -0.44% led by a -1.78% decline in Softbank while the Korean Kospi fell al little more than -0.50% on weakness in shares of SK Hynix. The Australian ASX posted a slightly smaller loss, about -0.30%, following the latest policy statement from the RBA. The RBA has held rates steady with a warning economic slowdown may last longer than expected.

European Markets Mixed As Politics Takes Center Stage

The EU equities indices were mixed in early Tuesday trading as politics takes center stage. Uncertainty over the U.S./China trade deal and the Brexit is coming to a crescendo. Both issues may be advancing in a positive manner, trade more so than Brexit, but there is no guarantee yet either will be resolved. The UK FTSE 100 was in the lead as UK and EU officials meet once again in Brussels. The meeting is another in a series of attempts to smooth the wording of key issues of Theresa May Brexit Deal so the MPs will be able to reach consensus. The DAX and CAC were both down about -0.25% at midday.

In stock news shares of telecom companies were up about 1.0%. The move was driven by Vodaphone’s announced issuance of 4 billion in mandatory convertible-bonds. Shares of German chemical company Evonik advanced 4.0% on an announced divestiture of non-core units. Debenhams, a retailer, warned it would not meet a recently issued revenue guidance and shares fell -8.0%. Eurofins also moved lower, nearly -10.0%, on word it would reduce CAPEX M&A activity this year.

The U.S. Markets Are Flat Following Monday’s Rout

U.S. futures trading was indicating a flat open for the major indices on Tuesday morning. Traders are waiting for news on trade and on edge following Monday’s fall from key resistance targets. Secretary of State Mike Pompeo has gone on the record saying the two sides are on the cusp of a deal but still no details to soothe frayed market nerves.

Later today economic data in the form of services PMI and New Homes Sales may move the market.

In the meantime, traders will be focusing on retail earnings which are due out this week. So far the results are better than expected and this morning report from Target is the same. The company reports a solid top and bottom line beat that was driven by better than expected comps and a 25% increase in digital sales. The news was well received and helped shares of the stock advance more than 6.0% in premarket trading.

US/Sino Trade Deal Takes Shape, EU Up Despite Brexit Woe, Industrials Lead U.S. Market Higher

Trade Hopes Lift China To New High

The Shanghai Composite led Asian markets higher on Monday following a report from the Wall Street Journal. The report states U.S. and Chinese negotiators are moving closer to completing a deal. The story alleges the two sides are in the final stages although there is little detail as yet. What we do know is that China has offered to lower tariffs on a wide range of U.S. products from chemicals to autos while on the U.S. side it is possible we’ll most or all sanctions and tariffs imposed in the last year reduced or removed.

The Shanghai Composite moved above the 3,000 for the first time in over 8 months as it extends it march into bull-market territory. The Japanese Nikkei posted the second strongest gain, 1.02%, followed by a 0.52% advance in the Hong Kong Hang Seng. Shares of ZTE, key to the international trade debate, advanced nearly 2.0%. The Australian ASX posted a gain of 0.40%, led by the miners and materials sectors, while the Korean Kospi posted the only loss at -0.22%.

Trade Hope Lifts EU Market, Brexit Still A Worry

Trade hopes helped lift the EU indices in early Monday trading. The UK FTSE leading with a gain near 0.75%, the UK-centric index was supported by domestic news as well. On the Brexit front, the Irish PM has gone on the record suggesting an extension to Article 51 is probable. If passed, the extension would likely push out the date for Brexit to June. Theresa May, in other Brexit-related news, has initiated a $1.29 billion fund to aid less-prosperous UK towns in the post-Brexit period.

The French CAC was posting the second strongest move at midday, about 0.70%, with the DAX trailing at only 0.25%. In stock news, shares of UK tabloid Daily Mail moved up more than 4.0% because the company announced a plan to return $1.29 billion to shareholders. Shares of Rotork, also UK-based, fell more than -3.0% after it reported earnings and revenue below expectations.

Industrials Lead U.S. Markets Higher

While the trade-news is good, there are still some concerns lingering in the market. Details for the deal remain sketchy and there is little hope of significant headway on the core issues. The industrial sector helped push the U.S. equity indices higher in early Monday trading. The Dow Jones Industrial Average indicated up about 0.35% in the pre-market session. The move was in turn led by shares of industrial giants Caterpillar, Boeing, and Deere which all have extensive exposure to China.

Regarding the indices, the tech-heavy NASDAQ was in the lead with a gain near 0.55% followed by a 0.35% advance in the broad-market S&P 500. This week will be dominated by trade negotiations but traders should not discount the data. This week is full of key economic data from the U.S. including the all-important Non-Farm-Payrolls on Friday. The consensus is for job gains in the range of 190,000; so long as the twelve-month average remains above 200,000 the market should remain strong.

The more important data, found within the NFP, will be average hourly wages. Wages have been growing near 3.0% for some time and accelerating. The gains are underpinning strength in the consumer that is in turn supporting the U.S. consumer-based economy.

 

Equities Down On Trade Concerns, Brexit Still In Focus, Powell Testimony Begins In Washington

Asia Moves Lower, Lack Of Clarity Leaves Traders Cautious

Asian markets were largely lower on Tuesday. The move is in response to growing caution centered on the US/China trade negotiations. The negotiations are progressing rapidly towards a trade deal, news over the past few days has led the markets to new highs, but a lack of clarity about what a deal really means has led traders to rethink their positions. A trade deal could take many forms including one in which tariffs now in place remain in place.

Chinese equity indices fell about -0.65% in Tuesday trading after posting +5% gains in the prior session. Chinese markets have entered bull market territory, the Tuesday retracement does not alter that fact; the Shanghai and Shenzen Composites are still up more than 20% from their lows. The Japanese Nikkei fell about -0.37% with robot-maker Fanuc in the lead with a loss of -1.29%. The Korean Kospi fell -0.27% with international tech-giant Samsung down -1.25%

EU Market Sours On Trade, Brexit Still In Focus

Cautious trading was the name of the game in the EU on Tuesday as well. Shares in the region were down -0.16% to -0.90% with the UK FTSE in the lead at midday. The FTSE was in the lead because Brexit fears are simmering. Theresa May’s Brexit deal still faces stiff opposition and the Labour Party is front and center in those ranks. The Labour Party has submitted an alternate Brexit Deal for Parliament to vote on; if the alternate is vetoed Labor says it will call a “people’s vote” on whether Brexit should happen or not.

On May’s end of things, she says Parliament will be able to vote on her deal by March 12th. If the deal is not approved the Parliament will vote on ruling out a no-deal Brexit the following day and then vote to extend the Article 50 Deadline the day after that.

In business news UK construction supply company Travis Perkins shot to the top of the listings. The company reported better than expected revenue and earnings sending shares of the stock up by 11% in early trading. The earnings were aided by cost-cutting measures which are seen aiding the company long-term.

Powell Testimony Starts In Washington

Trade news is taking a back-burner today and this week now that the last round of talks has concluded. Optimistic but cautious traders will now turn their focus to FOMC Chief Jerome Powell who is slated to give the annual testimony to Congress. The testimony begins at 10 AM ET and last four days, the first two in the House of Representatives and the second before the Senate. He is expected to give a positive view of the economy, highlight risks (trade concerns/slowing growth), and outline the expected path of interest rate policy. He is not expected to provide any new information or viewpoints.

In stock news shares of Caterpillar fell more than -3.5% after it was downgraded. Analysts at UBS have downgraded the stock to sell citing weak 2020 revenue and slowing global construction demand. Shares of Home Depot were also moving lower in the early premarket session. The home improvement warehouse missed on the top and bottom line sending shares down -2.5%.

In economic news Housing Starts fell more than expected to hit a two-year low. Starts fell -11% for the month and -10% for the year as builders prepare for what may be a slow year for sales. The caveat is that the data is for December, delayed by the Government shutdown, and contradicted by more recent data suggesting real estate activity is picking up in the first quarter of 2019.

China Enters Bull Market, Trade Hopes Lift EU, Trump-Xi Summit In Sight

Asian Markets Entered Bull Market Territory As Trade Hopes Lift Stocks

Chinese equity indices surged more than 5.5% on Monday following news US and Chinese negotiators were making substantial progress on key trade issues. The news was backed up by Trump-Tweets to the effect he would delay the implementation of March 1 tariffs. The news is mitigated by the fact tariffs may still be levied if a final deal isn’t made. Regardless, the Shanghai and Shenzen indices are now both up more than 20% from their recent lows.

Elsewhere in the region stocks were buoyant but less so than in China. The Hong Kong-based Hang Seng led with a gain of 0.50%. Shares of China Construction Bank and ZTE were at the top of listings with gains of 2.3% and 2.2%. The Japanese Nikkei, aided by a near 1.0% increase in retail giant Fast Retailing, was close behind the Hang Seng at 0.48%. The Austrialian ASX and Korean Kospi were up 0.30% and 0.09% respectively.

Trade Hopes Lift, Brexit Woe Weighs, EU Indices Mixed

Trading was mixed in the EU on Monday because of trade hopes and Brexit woe fighting for dominance. On the one hand, trade talks are progressing quickly and promise to bring an end to trade-war between the US and China. The EU, also in the tariff-crosshairs, is expected to reach a tariff-avoiding deal with the US in the near future.

On the other hand, another delay in the Brexit process has traders worried hard-Brexit is unavoidable. Theresa May has delayed a key vote by Parliament because the wording on the Irish Backstop is still not acceptable. Because the deadline for Brexit is less than five weeks away there is a growing chance no deal will be reached.

The DAX was leading advancing indices at midday. The German index was up about 0.50% with the French CAC up about half that. The UK FTSE, understandably, lagged Monday trading with a loss near -0.25%.

In stock news, shares of UK home builder Persimmon were down -5.0% after lawmakers revealed it is under investigation. Lawmakers are concerned about practices relating to the Help To Buy Scheme. In Italy, banks led with gains near 2.0% after Fitch reaffirmed its BBB credit rating on the country.

A Trump/Xi Summit Is In Sight

Shares of US-listed stocks were moving higher in the early Monday session. The major indices were looking at an open near 0.55% in the premarket session as trade hopes intensify. Trump says “substantial progress” has been made on key issues like intellectual property rights and technology transfers. The news Trump would delay the March 1st tariffs was also compounded by emerging details about a Trump/Xi Summit. The summit is expected in late March and will be located at Trump’s Mar-a-Lago resort.

Shares of GE were on the move in early trading after it announced the sale of its biopharma unit for $21.4 billion. The deal includes $21 billion in cash that GE plans to use for deleveraging and balance sheet improvement. Barrick Gold has made an all-stock offer to merge with rival Newmont Mining. Newmont is already discussing terms to merge with Goldcorp, Barrick Gold says its deal is a superior offer.

China Cracking Down On Australia, Trade Hopes Lift Stocks, The Worst May Not Be Over For Equity Markets

China Bans Coal From Australia

Shares of Australia’s coal miners took a hit on news China banned coal imports from Australia. The ban affects so far only one of the northern ports but worth about 2% of Australia’s export volume. The move is in retaliation of Australia’s treatment of Huawei earlier this year and closely related to US/China trade issues. Despite the weakness in the mining sector, most shares in Australia were able to post gains, the ASX closed up 0.46%.

Chinese markets led the advance on growing hopes a trade deal in principle would soon be reached. Thursday’s news that draft memoranda were in progress outlining a commitment to principles is the reason. That, along with a high-level meeting in Washington, helped the Shanghai Composite advance 1.91%.

The Hong Kong Heng Seng was also higher but a more modest 0.65%. The Korean Kospi was closer to flat, up only 0.08%, while the Japanese Nikkei fell -0.18%. Japanese sentiment was weighed down by bad results from chain-store retailer Family Mart. The company miss expectations sending shares down nearly -1.0%.

Trade Hopes Lift Stocks In Europe, Confidence Falls

Major equity indices were higher across the board in the early EU session. The UK FTSE 100 was in the lead at midday with a gain over 0.60% and closely followed by the German DAX and French CAC. Basic resources were in the lead, they have extensive exposure to China, and may extend their gains as the US/China trade deal develops. With one week to go until the March 1st deadline hopes are high talks will progress enough for Trump to postpone or cancel the next round of tariffs.

Today’s data is another reminder of the effect of global trade on the economy. Business Confidence in the EU fell much more than expected in the last month and now at 4 year low. The gauge of Business Confidence has been in decline for six months as trade tensions escalated and the effects of tariffs set in, now that negotiations are on the upswing that may change.

The Hardest Part Is Still To Come…

US futures indicated a positive open in early Friday trading as hopes rise a trade is close to hand. The major US indices were looking at gains in the range of 0.35% to 0.45% at the open with traders looking forward to today’s big meeting. Chinese Vice Premier Liu He is slated to meet with President Trump as both sides prepare for the final confrontation. Now that negotiations have reached the point core issues are stake the risks negotiations will fail are intensified.

There were no economic reports in today’s news and earnings season is all but over. About 90% of the S&P 500 has reported for the 4th quarter with only a few names of note left on the schedule. Today’s earnings news includes Cabot Oil & Gas. The company says revenue grew 78.9% over the past year and beat consensus estimates. Shares of the stock held steady in pre-market trading however as EPS fell short of estimates.

Fed Minutes Not So Dovish, Scandal Rocks EU, The Trade Deal Is Coming Into Focus

Asian Markets Are Mixed Following FOMC Minutes

Asian markets were mixed on Thursday following the release of the FOMC’s meeting minutes. The minutes were more and less than what the market expected in that the end of QT is in sight but rate hikes are still on the table. The FOMC, in their discussion, highlighted the mounting risk to global and US economics that can all be traced back to heightened trade tensions between the US and China.

The Australian ASX advanced the most, aided by a 1-2% increase in the Big Banks, posting a gain of 0.70%. The Hong Kong Hang Seng closed with a gain of 0.41% and was supported in the final hours by Lenovo. Lenovo, the world’s largest manufacturer of PCs, reported earnings blowing past expectations. The company has returned to profit sooner than expected and says that profit is sustainable. The company suffered from a one-off tax-hit related to US tax reform that will not impact results in future quarters.

Korean equities were less buoyant despite the release of Samsung’s new phone. Shares of Samsung closed with a gain of only 0.10% while the greater Kospi posted a small loss. The Shang Hai Composite closed with the largest decline but that was only -0.34%.

Europe Rocked By Scandal, Again

EU markets were weighed down by a new scandal in European banking. The latest allegations involve Swedbank and Danske Bank and dubbed serious by regulators. The charges involve cross-border money-laundering and could result in jail time for guilty parties.

The FTSE 100 was showing the most loss at midday, down about -0.75%, as Brexit Angst and weaker than expected PMI readings create another drag on sentiment. The pan-European Markit Flash Manufacturing PMI fell more than expected and into contractionary territory as businesses cut back on activity due to US/China trade relations.

Countering that, Services and other business were strong enough to more than offset the weakness in manufacturing. The Composite PMI rose 3.4 points to 51.4 which shows a net increase in EU economic activity. The DAX was trading slightly higher at midday while the CAC was slightly lower.

A Trade Deal Comes Into Focus

The major US equity indices were trading flat in the early premarket session. The S&P 500 was in the lead with a meager advance, about -0.17%, while the Dow Jones Industrials and NASDAQ Composite were both down about -0.10%. The move is in the wake of yesterday’s FOMC minutes, minutes that show a Fed ready to pounce should business activity reaccelerate, but still supported by trade-related news.

The latest reports say that US and Chinese negotiators are working on documents that would essentially end the trade war. The packet includes six memorandum outlining structural issues and the path to their resolution. The deal also includes a list of ten items China would begin buying from the US among other concessions from both sides.

Today’s economic data is mixed. The initial claims data shows joblessness decreased more than expected, net positive for the dollar, but Durable Goods was only 1.2% and the Philly Fed MBOS fell into negative territory. The data is yet another indication global and US economies are slowing, confirmation US/China trade tensions are hurting both countries.

Trade Hopes Spur Rally, Europe Up On Earnings, FOMC Back In The Spotlight

Trade News Spurs Global Stocks To New Highs

An unexpected vote of approval from US President Donald Trump has spurred global markets to new highs. The news, that President Trump thinks the trade negotiations are progressing well and that the March 1st tariff deadline may be extended, are a welcome sign for hopeful markets.

The Korean Kospi led the gains with an advance of 1.09%, boosted by tech and autos, while others in the region were less euphoric. The Hong Kong-based Hang Seng posted the second largest advance, about 1.01%, while the Japanese Nikkie and Shanghai Composite advanced 0.60% and 0.20% respectively. The Australian ASX posted the only loss, -0.17%.

Word on the street is US negotiators have requested China maintain Yuan stability as part of a larger trade deal. The yuan, whose valuation is closely regulated by the PBOC, strengthened on the news pushing the USD/CHN down towards its one-month low, just above the six-month low.

European Markets Drift Higher On Earnings

European markets were also positive in early Wednesday trading as earnings reports continue to be released. Today’s news includes reports from Irelands’s Glanbia and Britain’s Sainsbury. Supplements company Glanbia reported that its pretax profit rose 16% over the last year and it expects to see growth in the high single digits in 2019. Shares of that stock rose more than 10% on the news.

Shares of Sainsbury, however, were not buoyant after a UK regulator weighed in on the supermarket chain’s plans to take over the Walmart-owned ASDA. The UK anti-trust regulator says the takeover should be blocked or Sainsbury will need to close or sell a large portion of its existing stores. Shares of that stock tumbled more than -15% on the news.

In political news, UK Prime Minister Theresa May is heading back to Brussels. This is the latest effort in her attempt to renegotiate/reword her Brexit deal as the deadline fast approaches. The German DAX was in the lead in midmorning trade, up about 0.40%, while the French CAC and UK FTSE 100 were trailing at 0.27% and 0.18%.

The FOMC Is Back In The Spotlight

US futures were indicating a flat to slightly negative open in the early pre-opening session. The cautious tone comes a day after major indices surged to new highs and is due to today’s FOMC minutes. The minutes are the latest read on sentiment with the FOMC and will play a major role in shaping the market outlook for future rate hikes and quantitative tightening.

Quantitative tightening, otherwise known as the Fed’s Balance Sheet Runoff or Unwind, has been criticized for curbing US economic expansion. At the current rate, the wind-down is equal to 25 basis points of policy tightening per quarter above and beyond interest rate policy. The market is expecting to hear something along the lines the wind-down will be slowed or stopped, news that will likely catalyze the equity indices to new highs.

Trade Tensions Simmer, Banks Lead EU Lower, Earnings Still In Focus

Asian Markets Mixed As Trade Tensions Simmer

Asian markets were flat and mixed at the end of Tuesday trading as renewed trade tensions cast a pall on this week’s negotiations. China claims the US is stifling their economic development by fanning cybersecurity fears. The fear is that foreign business, government, and personal security is at risk from Chinese technology. The hang-up is not new, it is one of the key issues at stake in the US/Sino trade war, and may throw this weeks talks off track.

Trade talks are scheduled to start today in Washington. This is the third round of key talks since the first of the year and markets are expecting to see some progress. Early in the week, lower-level talks will lead to higher-level talks and the possibility Trump will postpone his March 1st deadline.

The Hong Kong Heng Seng led declining markets with a loss of -0.42% and was followed by the Korean Kospi. Banks led the losses with HSBC in the lead. The Hong Kong-listed shares fell -1.48% on weak earnings and sparked weakness in the global banking sector. The Australian ASX led advancing markets with a gain of 0.28%, followed by the Nikkie and Shanghai with gains of 0.10% and 0.05%.

The Banks Lead EU Markets Lower

EU indices were mostly lower in early Tuesday trading after HSBC missed earnings expectations. Europe’s largest bank says revenue and earnings were impacted by volatility and uncertainty around the Brexit and US/China trade relations. The bank also says the Brexit and US/China trade relations will put up hurdles in 2019; shares fell -4.0% in EU trading.

The UK FTSE 100 led the decline with a loss of -0.62% as weaker than expected wage data helped depress sentiment. The French CAC was in second place with a loss near -0.40% followed by the German DAX at -0.16%. In Germany, the trading sentiment was lifted by Heidelberg Cement. The company says it sees no impact from Brexit or trade concerns and has increased its outlook for cement demand this year. Shares of that stock were moving higher at midday.

Earnings Are Still In Focus For US Traders

Earnings season is winding down in the US but still a focus for traders. Today’s news includes pre-opening reports from Walmart and Advance Auto Parts. Both stores delivered revenue in line with expectations and EPS above consensus but shares of the two stocks did not respond the same. Walmart moved higher, aided by an increase to the dividend, while shares of Advance moved lower to retrace gains seen in the previous week.

The major indices were moving lower in early futures trading, down about -0.25% across the board, but the losses were minimal. The sentiment is weighed down by trade-related angst but there is still hope a deal can be done. The risk for this week is that talks will stall or in some way lead traders to think the March 2nd tariffs will be implemented. This week traders will also be watching for the FOMC minutes, due out on Wednesday, as well as a raft of data due on Thursday.

The Week Ahead – Brexit, PMI Numbers and Trade Talks in Focus

On the Macro

For the Dollar:

Key stats include December durable goods orders, February’s Philly FED Manufacturing Index, prelim U.S private sector PMI numbers and existing home sales figures all due out on Thursday. An upward trend in the weekly jobless claims figures has also made the Dollar more sensitive to the weekly figures.

The FOMC meeting minutes on Wednesday and FOMC member commentary will also be in focus.

The Dollar Spot Index ended the week up by 0.29% to $96.916.

For the EUR:

Stats include economic sentiment numbers due out of Germany on Tuesday and Eurozone consumer confidence numbers on Wednesday in a quiet start to the week. A busy Thursday includes prelim February private-sector PMI numbers out of France, Germany, and the Eurozone. At the end of the week, finalized GDP numbers and business sentiment figures are due out of Germany. Finalized January inflation numbers are also due out during the week, with Friday’s Eurozone figures of greater influence.

Outside of the numbers, the ECB will release its monetary policy meeting minutes on Thursday.

The EUR/USD ended the week down by 0.24% to $1.1296.

For the Pound:

It’s a quiet week ahead, with stats limited to employment figures on Tuesday and CBI Industrial Trend Orders on Wednesday. The employment figures will be the key driver on the data front.

Outside the numbers, Brexit chatter will continue to overshadow the economic calendar through the week.

The GBP/USD ended the week down 0.42% at $1.2889.

For the Loonie:

Economic data is limited to wholesale sales figures on Thursday and retail sales figures on Friday. We would expect the retail sales figures to be the key driver on the data front.

Outside the numbers, the effects of U.S – China trade talks on market risk sentiment will also influence ahead of a scheduled Bank of Canada Governor Poloz speech on Thursday.

The Loonie ended the week up by 0.26% to C$1.3244 against the U.S Dollar.

Out of Asia

It’s a relatively quiet ahead.

For the Aussie Dollar:

Economic data includes 4th quarter wage growth figures due out on Wednesday and January’s employment numbers due out on Thursday. We would expect both sets of stats to provide direction.

Outside of the numbers, the RBA meeting minutes are due out on Tuesday, which will be a market reminder of the latest shift in sentiment towards policy. RBA Governor Lowe is scheduled to speak on Friday, who may add further color. Additionally, expect updates from trade talks between the U.S and China to also influence.

The Aussie Dollar ended the week up 0.75% at $0.7141.

For the Japanese Yen:

Stats are limited to January trade data, which is due out on Wednesday and January inflation figures due out on Friday. Of less influence, but of interest, will be the release of December machinery orders on Monday and February’s prelim manufacturing PMI on Thursday.

Market risk sentiment will be the key driver through the week as trade talks resume.

The Japanese Yen ended the week down 0.67% at ¥110.47 against the U.S Dollar.

For the Kiwi Dollar:

Stats are limited to 4th quarter producer price input figures that are due out on Wednesday. The lack of stats will leave the Kiwi firmly in the hand of market risk sentiment through the week. Following the RBNZ’s surprisingly hawkish outlook on growth, some resilience in the Kiwi Dollar is to be expected.

The Kiwi Dollar ended the week up 1.90% to $0.6868.

Out of China:

There are no material stats scheduled for release through the week, leaving sentiment towards trade talks the key driver and influence on market risk sentiment.

Geo-Politics

U.S – China Trade War:  Trade talks are due to resume, with no agreement reached on Friday. With the 1st March deadline looming, an extension will be likely should there be no collapse in talks.

Brexit: Unity!!! British PM calls for a united parliamentary front on Brexit. With time running out, finding support from the EU should be the first order of business. We can expect progress, or lack of, to be the Pound’s key driver in the week ahead.

The Rain in Spain: Snap elections called for April. Polls show a divided country, which could deliver another populist party to Brussels before the summer.

The Rest

On the monetary policy front,

For the USD, the FOMC meeting minutes are due out. Some more details on how the Committee is divided on policy and sentiment towards the economy will be of particular interest. A number of FOMC members are also scheduled to speak through the week, which will garner the Dollar’s attention.

For the EUR, the ECB’s more dovish outlook on growth will give the ECB monetary policy meeting minutes a greater influence on Thursday. ECB President Draghi is also scheduled to speak on Friday, which could add further pressure on the EUR.

For the AUD, the RBA meeting minutes are due out on Tuesday. With the RBA also taking a more dovish outlook on growth, sensitivity to the minutes will depend on progress on trade talks between the U.S and China. RBA Governor Lowe is scheduled to speak on Friday that could provide further direction should monetary policy be discussed.

For the Loonie, BoC Governor Poloz is scheduled to speak on Thursday. Economic data has been far from impressive suggesting a dovish bias should monetary policy be discussed.

Asia Falls On US Data, Trade Talks Remain In Focus, US Futures Rise In Early Trade

Weak US Data From US Sends Asian Stocks Ducking For Cover

Asian equity indices took a dive in Friday trading following a round of weak data from the US. December US Retail Sales made their biggest one month decline, down -1.2%, and renewed fears of a slowing global economy. The data, while shocking, was largely shrugged off by US markets in favor of trade optimism.

On the trade front, US/China trade talks have concluded for the week with no major headlines to speak of. US Secretary of State Steve Mnuchin says progress has been made but no details were given other than that another round of talks have been scheduled for next week in Washington.

The Hong Kong Heng Seng led the decline with a loss of -1.87% and posting most of the loss in the final hour of trading. The Shanghai Composite shed -1.37% followed by a -1.34% decline in the Korean Kospi. The Japanese Nikkei fell -1.13% while the Australian ASX bucked the trend to post a small gain. Tech led the decline as it is the most vulnerable to trade woe with shares of Samsung and SK Hynix moving lower -3.0% and -4.66% respectively.

European Indices Move Higher On Hope

European indices were buoyed by trade hope after it was revealed another round of trade talks has already been slated for next week. The news is far from concrete but is taken as a sign the negotiation is progressing in a satisfactory manner, perhaps satisfactory enough to allow US President Trump to postpone the implementation of the March 2nd tariff deadline.

The French CAC was in the lead in midmorning trading, up nearly 1.60%, with the German DAX and UK FTSE trailing at 1.22% and 0.58% respectively. In stock news, Germany’s Scout24 surged to the top of the listings after a consortium of private equity firms including Blackstone offered to buy the online classified ads business for $6.4 billion. France’s Eutelstat was among the days worst performers posting a loss near -6.0% after reporting weaker than expected earnings.

US Futures Point To Positive Open

US futures were pointing to a positive open on Friday. The major indices were looking at gains near 0.25% after posting similar losses in the previous session. The move is supported by trade optimism and some better than expected data including a more-current read on Retail Sales.

The January read on retail sales was a bit weaker than expected but nothing like the miss posted for December. The headline and core were both flat at 0.0% versus an expectation for 0.1% and 0.2%. Manufacturing data, the Empire State Manufacturing Survey, was better than expected at 8.8 and suggests the US economy is still in decent shape.

Today’s action is likely to be affected by options expiration. Today is expiration day for US equity options which may induce volatility as traders take profits and settle contracts.

Markets Wait On Trade News, Weak Data Tanks Stocks, Volatility On Tap For Thursday

Asian Markets Closed Flat On Thursday

Most Asian equities indices closed flat on Thursday as traders and investors wait on concrete news on the US/China trade talks. The talks, in Beijing, start today and may bring much needed good news. According to reports from Chinese media President Xi is slated to meet with US trade representatives on Friday, a sign that some form of a deal is close to hand.

The Japanese Nikkei, the Shanghai Composite, the Hong Kong Heng Seng,and the Australian ASX all closed with losses but the moves were less than -0.10%. The Korean Kospi was the only index to move higher and it bucked the trend with an advance of 1.17%.

On the economic front trade data from China and GDP data from Japan helped support the market. In China, exports rose a sharp 9.1% over the last month, much better than the expected decline, while exports fell a mere -1.5% versus an expectation for a much larger decline. In Japan, GDP data came in as expected but was not enough to spark a rally in the yen.

European Markets Rise On Earnings, Fall On Data

EU indices were in the green across the board in midday trading but fell sharply in the wake of weak retail data from the US.  The CAC was in the lead with an advance near 0.65% while the German DAX and UK FTSE were both up about 0.30% before the midmorning reversal. The DAX moved into negative territory while the CAC and FTSE maintained slight gains.

France’s Airbus was one of today’s top performers after it reported better than expected earnings. The company also says it will scrap its A380 Cruiseliner on word from Emirates Airlines it would be ordering fewer of the iconic airliners in favor of smaller jets. The airline will continue to use its current A380 well into the 2030’s. Shares of Airbus rose more than 4.0% on the news.

Germany’s Gerrisheimer also surged to the top of the rankings after it reported earnings. The medical device maker said it was back on a path to growth and sent its shares up more than 10.0%.

Weak Retail Sales Tanks Stocks

US futures were indicating a positive open in early Thursday trading until the retail sales data was released. The move was supported by growing optimism on trade and a possibility positive steps are being made but optimism wasn’t enough to offset an unexpected decline in retail sales.

In today’s trade news, US President Donald Trump is considering a 60-day extension to the March 2nd tariff deadline provided negotiators are able to make concrete progress before the deadline is reached.

On the economic front, a raft of weaker than expected data sent futures diving and the dollar moving lower against a basket of global currencies. On the inflation front PPI came in below expectations at the headline level, down -0.1% versus an expected increase of 0.10%, while Retail Sales fell -1.2% MOM and -1.4% YOY. The Retail Sales data was particularly important as it provides fresh evidence of slowing global economic activity.

Equities High On Trade Talks, Weak EU Data Caps Gains, US Indices Extend Tuesday Rally

Asian Equity Markets Closed Higher On Trade Optimism

Equity markets in Asian were mostly higher in the Wednesday session after news emerged the March 2nd deadline for a US/China deal may be extended. US President Donald Trump says he will postpone the implementation of new tariffs, an additional 10% on top of an already existing 10% if a trade deal can be reached.

Secretary of the Treasury Steve Mnuchin and Senior Trade Representative Robert Lighthizer are currently meeting with Chinese Vice Premier Liu He in Beijing. According to reports from Chinese media the two may be meeting with Chinese President Xi Jinping on Friday in an effort to reach an accord before the deadline just three weeks away.

Chinese indices were up the sharpest on the news, the Shanghai Composite up nearly 1.85%, while gains in other markets were less robust. The Japanese Nikkei posted the second largest gain, about 1.35%, while the Heng Seng rose 1.16% and the Korean Kospi rose only 0.50%. The Australian ASX was the only major index in the region to close with losses, down -0.25%, despite a 5% surge in energy giant Beach Energy.

Weak Data Caps Gains In The EU

A round of weaker than expected from the EU points to a continuing slowdown of the European economy. From the EU itself, Industrial Production fell -0.9% in the last month and is down -4.2% over the last year. From the UK, the Consumer Price Index came in at 1.8% and a two-year low.

The FTSE led gains as the weak inflation data points to another year of easy money policy from the BOE, the UK-based index was up 0.60% in midmorning trade. The German DAX and French CAC were both up about 0.30%.

IN stock news, most sectors were higher although the chem-stocks were in the lead with average gains near 1.0%. Dutch bank ABN Amro reported earnings before the bell and fell more than -7.0% on the news. The banks says revenue and earnings fell short of expectations and that it may not meet its goals this year.

US Equities Rise On Good News

US equities extended Tuesday’s rally on a trifecta of good news including trade talks, the possibility tariffs will be delayed, and a deal to avert a government shutdown. The major indices were all in the green in early pre-opening trading with the tech-heavy NASDAQ Composite in the lead posting an advance near 0.45%.

The possible meeting between US negotiators and Chinese President Xi Jinping is the news of the day. The meeting, if it occurs, is unexpected and a sign the talks are advancing more rapidly than recent White House rhetoric has alleged. The meeting may result in a deal-in-principle that many believe could remove tariffs put in place last year.

In economic news, CPI was flat and tenth weaker than expected while core-CPI rose 0.2%. The data is in-line with the current FOMC outlook but helped strengthen the dollar versus the basket of global currencies.

Tech Surges, Markets Optimistic, Shutdown-Deal In Sight

Asian Markets Up On Tech, Japan Leads

Asian equities markets were up on strong gains in tech. The move was driven over growing optimism trade talks between the US and China will bear fruit. The Japanese Nikkei led with a gain of 2.61% with tech in the lead. Shares of Fast Retailing and Renesas Electronics were today’s top performers in Japan. Fast Retailing jumped 3.0% while Renesas Electronics surged more than 16%.

The Shang Hai Composite and Hang Seng were also both trading higher although gains in those markets were more reserved at 0.68% and 0.10%. The Australian ASX closed with a small gain as well, up 0.30%, while the Kospi advanced 0.45%.

In stock news, the Korean-based Samsung and SK Hynix were among today’s top performers with gains greater than 2.30%. Both indices are key to the global tech supply chain and sensitive to trade-related news.  LG Electronics, another heavy-weight in tech, led the market with an advance of 3.75%.

Europe Up On Rising Optimism

European indices were mostly higher in midday trading as a rising wave of optimism supported equities prices. The German Dax was in the lead with a gain near 1.10% with the CAC not far behind. The UK FTSE 100 was trading near the flat line despite reassuring news on Brexit.

Theresa May has returned from her trip to Brussels and says Parliament will be able to vote on the Brexit deal by February 26th. In the meantime, she will be working hard with the EU on rewording key issues so they are more palatable for UK lawmakers.

In stock news, shares of Michelin jumped more than 10% after the company issued positive guidance for 2019. Michelin now joins a host of international businesses able to profit despite depressed global trade, evidence global economic expansion is still assured for this year. Shares of Randstad, a Dutch-based staffing company, reported better than expected 4th quarter earnings and says a slowdown in hiring seen at the end of last year has not carried into 2019.

Government Shutdown Averted, Maybe

The Congressional bi-partisan commission on spending and immigration has reached a deal that would avoid a government shutdown. The deal includes money, $1.4 billion, for “physical barriers along the border” but not a wall. The question now is if President Trump will sign the bill or if he’ll push for more money or firmer wording.

US indices were higher on the news although the gains were capped. The Dow Jones Industrial Average led the market with a gain near 0.80% but the tech-heavy NASDAQ Composite and broad-market S&P 500 were not far behind. While the shutdown news is good the bill isn’t signed yet and there are still trade-related issued at hand. The meeting between Mnuchin, Lighthizer and China’s top trade officials is expected to lead to another step in the process but there is no guarantee it will happen.

Asian Mixed In Post-Holiday Trading, European Stocks Move Higher, Trade Talks Still In Focus

China Moves Higher On The First Trading Day Of The Year Of The Pig

Asian markets were mixed in Monday trading as markets wake up from last week’s Lunar New Year Holiday. Chinese markets led with gains greater than 1.25% and were followed by a less-robust 0.71% for the Hong Kong Heng Seng. The Australian ASX and Korean Kospi both posted moved less than 0.20% although one was up (the Kospi) and one was down (the ASX). Japan was closed for their Founder’s Day Celebration marking the anniversary of Japan as a nation.

In stock news, shares of Hong Kong-listed Tencent rose nearly 2.0% in Monday trading as tech led gains.

Market focus this week will be on the US/China trade talks scheduled for later this week. The talks are in Beijing and follow-up on a meeting held two weeks ago in Washington. The US is sending Secretary of the Treasury Steve Mnuchin and Lead Trade Negotiator Robert Lighthizer to the latest round of talks in effort to smooth out hurdles to reaching a trade deal. Last week US officials let it be known there was no Trump/Xi meeting on the table yet.

European Markets Move Higher On Trade Optimism

European indices moved higher in early Monday trading despite the cautionary tone from Washington. Traders in the region believe China and the US are on course to reach a trade deal even if the timing remains uncertain. Both nations are at risk of economic recession if a deal is not reached so incentivized to make concessions.

The French CAC led the gains with an advance of 1.10% as banks move solidly higher throughout the region. The DAX posted the second-largest advance in midmorning, about 1.0%, while the UK FTSE 100 came in at a slightly tepid 0.75%. Banks across the EU got a boost from good news in Italy. The EU just issued new capital requirements for the Italian banks and the news is good. Shares of most banks were up at least 1.0% with those in Italy advancing the most.

US Futures Move Higher

US futures move higher, pointing to a positive opening for US markets, on trade optimism despite a growing chance there will be another government shutdown. A key US Senator, Richard Shelby, has told reporters that the talks are stalled on immigration issues, the very issues that led to the longest shutdown in US history.

In trade news, there is not a lot of expectation on this week’s meeting, not anymore, but the market is still looking for positive development. Last week’s remarks from Larry Kudlow put the market back in its place but did not alter the outlook that trade relations are on the upswing.

In earnings news, more than 66% of the S&P 500 have reported so far for the fourth quarter and the results are better than expected. The problem is the outlook for earnings growth continues to suffer under the weight of trade tariffs and that will keep stocks under pressure in the near-term. There is not much data due out this week and what there is may be delayed because of the last government shutdown.

Renewed Trade Fear Weighs On Stocks, May Returns To Brussels, Weak Open Expected In The US

Hong Kong Reopens After The Lunar New Year Holiday

The Hong Kong Heng Seng Index reopened today after closing for the Lunar New Year Holiday. The first day of trading in the Year of the Pig was a dud, as expected considering the holiday atmosphere. Shares of Tencent led the decline with a loss of -0.52%. Equities markets in mainland China remain closed.

The Nikkei posted the largest decline on renewed trade fears. US sources including Larry Kudlow indicate the US and China are still far apart on trade, a meeting between Xi and Trump is not likely before the March 2nd deadline. If no accord is reached in principle or reality before March 2nd 10% tariffs on Chinese imports already in place will double to 20%.

Shares of Sony led the market with gains, bucking the bearish trend, driven by a new share buyback program. The program is the first ever in Sony’s history and sent shares of the stock up more than 4.0%. The Korean Kospi was also down, about -1.0%, on the trade news while the Australian ASX shed a less severe -0.34%.

European Markets Sour On Trade Woe

EU indices were moving lower in early Friday trading, led by the DAX. The German index was down about -0.50% at midday and possibly heading lower. The news on trade is a major setback for market sentiment and could weigh on equities in the near-term. Other major indices in the region were down about -0.25%.

News from the UK is that Theresa May is headed back to Brussels. She is expected to meet with EU officials to discuss alteration to the wording of the deal she has negotiated. EU officials have agreed to look at wording regarding the Irish-backstop, the major sticking point for Parliamentary approval.

In corporate news, shares of Skanska dropped more than -6.0% after announcing a smaller than expected dividend. In Italy, shares of Ubi Banco were halted after it reported weaker than expected revenue and earnings. Shares fell -5.0% in minutes and are not likely to recover if economic activity does not pick up.

US Futures Lower In Early Trading

US futures were lower in early trading as trade-related fears drag on sentiment. The S&P 500 was indicated as low as -0.60% in the early hours of pre-market trading but a bottom was formed and some of the losses were recovered by 9 AM.  While trade is the cause of concern, it is slowing global growth and the deteriorating outlook for earnings that is weighing on stocks.

US equities are expected to post a net-negative earnings growth in the first quarter of 2019, the first decline in growth in two and a half years. Until the trend changes, traders should expect to see the major indices move sideways within their trading ranges.

There are no economic reports scheduled for today but there are a few scheduled for next week including the PCE price index. Next week’s data may be delayed because of the recent government shutdown, and possibly by another government shutdown if a spending deal isn’t reached in Washington.

Markets Mixed After State Of Union Address, Earnings Still In Focus, Good News On Trade

Asian Markets Were Flat After Trump Speech

Markets in Asia were mostly higher in the wake of Donald Trump’s second State of the Union Address. In the speech, he said a trade deal was likely and that is good news. Sentiment in China edged higher on the news but the markets are still closed for the Lunar New Year Holiday.

Australian shares were largely higher although the action was mixed. The benchmark ASX advanced 0.34% but had been higher intraday. The move was driven on generally positive sentiment but was weighed down by profit-taking in the banking sector. On Monday, Australian banks saw high single-digit gains on a double-shot of good news including the conclusion to a government inquiry into the sector. The inquiry did not find it necessary to break up any of Australia’s largest banks but it did result in some charges filed against individuals and institutions.

European Indices Are Mixed As Earnings Roll In

European indices were higher in the earliest portion of the session but gave up those gains by midday. The German DAX led the reversal posting a loss near -0.50%, the CAC was down about half that amount, and the UK FTSE was closer to -0.10%. At the sector level, tech and banks led advancing issues with gains near 1.0%.

The biggest loser in today’s session is the online supermarket pioneer Ocado. A fire at its key robotic distribution center badly damaged the complex and will impact operations over the foreseeable futures.

Shares of CYBG, owner of Clydesdale and Yorkshire Banks, reported an unexpected increase in year-over-year lending. The bank says there is still demand in the UK’s housing sector despite Brexit uncertainty and strong competition. Shares of the stock surged nearly 15%. Industrial technology giant Hexagon also reported better than expected earnings driving its shares up nearly 10%. Hexagon execs say they are optimistic about China despite its slowing economy and trade fears.

Trade News Lifts Futures In The US

US futures were trading flat and mixed in the early pre-market Wednesday session until good news on trade hit the market. The news is this, Secretary of the Treasury Steve Mnuchin says the trade talks have been very productive and confirmed he is traveling to Beijing next week. The news reinforces the positive message delivered by Trump and Xi last week and points to accelerating momentum in the negotiation.

In earnings news, shares of GM spiked in early trading after it reported much better than expected earnings. The world’s largest automaker says revenue came in at $38.4 billion, $2 billion above consensus, and EPS was $1.43 which beat by $0.20 or 16.5%. The strength is due to pricing, mix, increased business at GM Financing, and cost controls so is expected to continue in 2019. Shares moved up more than 4.0% on the news.

On the economic front, a host of reports were scheduled for this morning but most were delayed by the government shutdown. The data that was released is the Export/Import data and trade balance. The data is rear-looking, for November, but shows a marked improvement in the US trade balance. The news is good and unexpected but had little impact on the dollar.

Global Markets Mixed On Christmas Eve, Politics Weighs On Market, Slowing Growth Outlook Points To Bear Market

Asian Markets Were Mixed On Christmas Eve

Asian markets were mixed as traders around the world prepare for the Christmas Holiday. Most markets in the region were open the full day except for Australia which closed early in anticipation of Santa Claus arrival. The Australian ASX led the region with an advance near 0.50% and was closely followed by the Shang Hai Composite’s 0.43% gain.

While global politics and fear of slowing growth are weighing on equities around the world Chinese markets were supported on Monday by word of high-level talks between the US and China. The Chinese Ministry of Commerce posted a message on its blog to the effect US/China trade talks had occurred over the past week between vice-ministerial level officials. No concrete developments were reported but the Ministry of Commerce does day deep exchange was made, new progress was achieved, and there are plans for more calls as the world’s largest trading nations work on a lasting agreement.

European Markets Mixed In Shortened Holiday Session

European markets were mostly lower in the shortened holiday session as traders and investors get ready for a day of family and friends. While most indices posted small losses the CAC fell -1.47% while the German DAX was able to post a small gain in today’s thinly-traded session.

Shares of Delivery Hero were the winners in Monday’s trade, up 10% on merger news. The company, which operates in several major EU markets, sold its German unit to a Dutch competitor for $1.1 billion. The deal will allow Takeway.com to operate on a much larger scale than it has been and without competition from DeliveryHero that has cost both companies millions in advertising and marketing dollars.

Shares of BMW fell on news South Korea had issued a fine against the company. The fine, about $9.96 million, is in response to allegations BMW has not been timely in its recall procedures and created a hazard for consumers. One of the allegations is BMW has been concealing the possibility of engine fires.

Slowing Growth Outlook Points To Bear Market, Or Does It?

US markets were indicated lower in early Monday trading but the outlook for the holiday week is not positive. Slowing global growth outlook, reinforced by the FOMC’s caution over growth risks, as traders and investors fleeing to cash. The problem is that the move is driven by fear and a market preparing for the worst despite outlook for 2.5% to 3.0% GDP growth in 2019 (for the US).

Along with the FOMC, trade disputes with China, a US government shutdown, and political uncertainty are pressuring the market lower. On the political front, US Secretary of Defense James Mattis is quitting his position weeks ahead of schedule in response to conflicts of opinion with President Trump. Trump is planning to reduce US forces in Syria and Afghanistan despite the view fro Mattis and the military community it would take several more years of committed fighting to fully defeat ISIS and the Taliban.

Traders should be cautious this week. The market will reopen on Wednesday but trading volumes will be light until after New Year’s Day. Index action may be volatile, traders should be wary of exaggerated movements and the possibility of whipsaw and snap-back trading action

China Leads World Equities Higher, ECB Ends QE, US Flat As Traders Weigh Trade Developments

Asia Moves Higher, Led By China, As Trade Tensions Thaw

Asian markets moved higher on Thursday as thawing trade tensions support indices around the world. A series of new developments began earlier this week that point to a concrete effort from within China’s ruling party to ease relations with the US and pave the way for a longer lasting trade deal. The most important of these developments is the possible end to China’s “Made In China 2025” agenda, a program intended to cement China’s dominance as a manufacturing powerhouse.

According to reports from the Wall Street Journal sources close to the top have indicated the “Made in China 2025” push will be toned down and new avenues for foreign investment in China will be opened. According to some market participants, this could be the most important development in trade to-date as it would do far more for the global economy than lowering tariffs on autos or China buying more US agricultural products.

The greater China region led the Asian equities markets with gains near 1.25% for both the Heng Seng and Shang Hai Composite. The Japanese Nikkei was close behind with a gain near 1.0% while the Korean Kospi and Australian ASX lagged with gains closer to 0.60% and 0.14% respectively.

EU Markets Mixed, ECB In Focus

EU markets were flat and mixed in early trading, both before and after the release of the ECB’s policy statement. The EU’s central bank, led by Mario Draghi, says that it will end its long-running QE program as expected. This means the bank will reduce its bond purchases from 15 billion euros monthly to zero starting at the end of December. The bank will continue to reinvest proceeds from prior bond purchases as needed and remains ready to support economic growth if conditions should deteriorate.

The EUR/USD was volatile in the wake of the news first surging on what appears to be a hawkish move from the ECB and then quickly reversing as traders turn their eye toward the FOMC. The FOMC is meeting next week and largely expected to raise rates, a move that is expected to keep the dollar supported.

US Futures Flat As Traders Weigh Trade Developments

In the US futures trading indicated a flat open for the major indices. The news is no surprise following this weeks volatility and maybe sign calm is returning to nervous markets. In business news, GE received a much-needed upgrade from JP Morgan on perceived benefits from turn-around efforts. The upgrade, to neutral from underweight, may indicate the bottom in the stock is near.

Today’s action is likely to be light, without new catalysts to move indices traders will be focused on Friday’s retail sales figures and next week’s FOMC meeting. The retail sales figures are expected to moderate from last month’s big gains but remain positive, the FOMC is expected to raise rates next and also indicate a data-driven slow-down in the rate-hiking timeline.

U.S. Stocks Tumble on Fear Economy is Poised to Weaken

The major U.S. stock indexes plunged on Tuesday, posting their biggest declines since October, as investors took profits following Monday’s sharp rise. The catalysts behind the massive shedding of risky assets are concerns over a possible economic slowdown and worries around U.S.-China trade which added to Wall Street jitters.

In the cash market, the benchmark S&P 500 Index settled at 2,700.06, down 3.2 percent. The blue chip Dow Jones Industrial Average fell 799.36 points to close at 25,027.07, down 3.1 percent and the tech-driven NASDAQ Composite settled at 7,158.43, down 3.8 percent.

Trading volume in U.S. stocks was higher than usual on Wall Street. Algorithmic traders stepped up their activity once the S&P 500 Index fell below its 200-day moving average.

As far as the sectors are concerned, the financials received the brunt of the selling, plunging 4.4 percent. However, the interest sensitive utility stock sector was the only positive in the benchmark index, rising 0.16 percent.

Concerns over a possible economic slowdown exerted the most pressure on the markets. Stocks started to weaken on Monday after the yield on the three-year Treasury note surpassed its five-year counterpart. When short-term yields trade above long-term yields, or invert, a recession could follow, however, it is often years away after the signal triggers. Furthermore, it has to be confirmed by two-consecutive contractions in GDP. Basically, the “inversion” is saying that the economy is poised to weaken.

Financial Stocks Affected the Most

The flattening yield curve has put the fear in bank stock investors because an inversion may hurt their lending margins. On Tuesday, the SPDR S&P Bank ETF (KBE) dropped 5.3 percent. Shares of J.P. Morgan Chase, Citigroup and Bank of America all weakened by more than 4 percent. Citigroup and Morgan Stanley both reached 52-week lows along with Regionals Financial, Citizens Financial and Capital One.

The SPDR Regional Banking ETF dropped 5.5 percent and closed 20 percent below its 52-week high. It also posted its worst day since March 2017.

What’s Up With the Trade War Truce?

Investors initially cheered the news from over the weekend that the U.S. and China agreed to hold off on any additional tariffs on each other’s goods on January 1, in order to allow trade talks to continue. However, discrepancies over when the truce would begin has led to confusion. While President Trump’s economic advisor, Larry Kudlow, told reporters Monday that the cease-fire would start from January 1, the White House later issued a corrected statement saying that the 90-day truce period would start on December 1.

Trading Volume Up Ahead of Stock Market Closure

Trading volume rose sharply on Tuesday, increasing more than 159 million shares of the SPDR S&P 500 ETF trust (SPY) exchanged hands. The SPY’s 30-day volume average is 110.5 million. The jump in volume comes as the U.S. stock market will be closed on Wednesday out of respect for former President George H.W. Bush’s funeral.