The Wednesday Market Minute
- Global stocks slip as weak China data and fruitless trade talks keep investors on edge ahead of today's Fed rate decision.
- Apple's stronger-than-expected third quarter earnings, as well as a robust outlook, will boost U.S. markets prior to the 2:00 pm Fed announcement.
- European shares flat despite solid German data and an in-line reading for second quarter Eurozone GDP, with the pound holding at a 28-month low of 1.2155 as Brexit worries grip regional markets.
- U.S. equity futures suggest modest opening bell gains on Wall Street ahead of earnings from General Electric, Humana, Qualcomm and Western Digitial as well as mortgage and jobs data at 8:30 am Eastern time.
U.S. equity futures nudged higher Wednesday, supported by better-than-expected Apple (AAPL) earnings and hopes that the Federal Reserve will signal a series of interest rate cuts into the second half of the year, both of which offset a rough start to trade talks between Washington and Beijing.
Apple's solid second quarter earnings, which beat analysts' forecasts for both topline revenue growth and bottom line profits despite slowing iPhone sales and slumping activity in China, have shares in the tech giant marked 4.5% higher in pre-market trading, a move that will add more than 62 points to the Dow Jones Industrial Average and boost both the S&P 500 and the Nasdaq.
The Apple boost, however, partially clouds investors concern over the fate of U.S.-China trade talks, which got off to a rough start at the Shanghai Xijiao State Guest Hotel today as U.S. Trade Representative Robert Lighthizer, as well as Treasury Secretary Steven Mnuchin, left their first face-to-face meeting with Chinese officials after less than half a day negotiations.
Investors are likely to park any concern for the talks to one side, however, as they prep for today's Fed rate decision at 2:00 pm Eastern time, with markets anticipating a 25 basis point rate cut and hints at further reductions between now and the end of the year.
Contracts tied to the Dow are suggesting a 72 point opening bell gain, while those linked to the S&P 500, which has gained around 2.4% for the month of July, indicate a 4.6 point bump to the upside. Apple's earnings are also likely to boost the tech-focused Nasdaq into a 31 point opening bell gain.
Overnight in Asia, weaker-than-expected factory data from China, as well as President Donald Trump's grim assessment of U.S.-China trade talks -- as well as the suggestion that negotiations might be postponed until after next year's elections -- kept stocks in the region on the back foot.
"China is doing very badly, worst year in 27 - was supposed to start buying our agricultural product now - no signs that they are doing so," Trump said on his official Twitter feed yesterday. "That is the problem with China, they just don't come through. Our Economy has become MUCH larger than the Chinese Economy is last 3 years."
Japan's Nikkei 225 slipped 0.86% on the final trading day of the month to close at 21,521.53 points while the region-wide MSCI ex-Japan benchmark fell 0.67% into the close of the trading session.
European stocks were little-changed throughout much of the morning session, with stronger-than-expected retail sales data from Germany, where June activity rose the most n more than 13 years, and an in-line second quarter growth reading of 0.2% for Eurozone GDP supporting shares ahead of the Fed decision.
The Stoxx 600 benchmark, which is essentially flat for the month, was marked 0.03% lower by mid-morning in Frankfurt, while Britain's FTSE 100 slipped 0.32% even as the pound held at a 28-month low of 1.2155 against the U.S. dollar.
Global oil prices extended their recent rally to a fifth consecutive session Wednesday, pulling U.S. crude prices past $58.00 a barrel, after data from the American Petroleum Institute showed a bigger-than-expected 6 million barrel decline in domestic crude stocks and the closure of Libya's Sharara oilfield, the nation's largest, owing to a pipeline issue.
Brent crude contracts for September delivery, the global benchmark, were seen 41 cents lower from their Tuesday close and changing hands at $65.13 per barrel while WTI contracts for the same month, which are more tightly linked to U.S. gas prices, were marked 30 cents higher at $58.35 per barrel.