Dovish Fed Supports Stocks, Global Equities Up On Optimism, China Feels Sting Of Trade Tensions
The U.S. Futures Are Up In Early Wednesday Trading
The U.S. index futures are pointing to a solidly higher open on Wednesday. The move follows the second best day for U.S. stocks this year. Today’s move is led by the NASDAQ Composite which is up about 0.70%, the Dow Jones and S&P 500 are both up about 0.55%. Market optimism is fueled by a dovish sounding Fed and signs trade tensions have not escalated to the point of no return.
In Fed news, yesterday’s comments from FOMC chief Jerome Powell sent the major indices rebounding from two-month lows. Powell says the committee stands ready to reduce rates if needed and they’ll do what it takes to sustain the expansion. In trade news, comments from China’s commerce ministry led the market to think trade talks were still possible. Today’s news includes plans for Treasury Secretary Steve Mnuchin to meet with PBOC chief Yi Gang. On the Mexican front, the U.S. and Mexico are in talks to stave off Trump’s threatened tariffs. Also, U.S. lawmakers are moving to block the implementation of tariffs against Mexico.
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In stock news shares of Nvidia, Caterpillar and Apple were all moving higher. All three companies have significant exposure to China and tariffs, Apple’s Tim Cook says the tech giant has not been targeted by China. In economic news, the ADP report shows U.S. job creation came to a near halt in May.
European Markets Move Higher On Fed Optimism
Markets in the EU moved higher in the wake of Wall Street’s big move. The French CAC is in the lead at midday on Wednesday with a gain of 0.55%. The German DAX and UK FTSE 100 are both up slightly less. The moves are further supported by better than expected Composite and Services PMI. Both indices rose from the previous month and more than expected in a sign of rebound within the EU economy. Other data was mixed but weaker than expected PPI and as-expected retail sales figures are net-positive for the EU economy.
In stock news, shares of Norsk Hydro advanced a little more than 4.0% after it beat earnings expectations. Shares of Dassault Aviation advanced a little more than 5.0% after it received an upgrade to buy from Goldman Sachs. At the other end of the spectrum, shares of Hargreaves Lansdown fell another -4.0%. The company is heavily exposed to the failing Woodford Equity Fund.
Asia Mixed, IMF Says China Feels Significant Impact From Trade Tensions
Asian indices were mixed on Wednesday despite strength in the U.S. Most indices were positive at the end of the session although gains were not equal. The Japanese Nikkei led with a gain of 1.80%, lifted by a 3.0% advance in Softbank, while most others gained 0.50% or less. The Shanghai Composite was the only to post a loss, -0.03%, but even that is not bad in light of the IMF’s GDP downgrade. The IMF says China has felt a significant impact from the trade war but the damage is so far contained. The IMF lowered its GDP target to 6.2% from 6.3% for 2019.