The Monday Market Minute

  • Global stocks eased from multi-month highs as investors prep for the start of the U.S. corporate earnings season and parse mixed statements on trade talks with China.
  • First quarter SP 500 profits are expected to fall 2.2%, before rebounding 2.8% in Q2, as bank earnings from JPMorgan, PNC Financial and Wells Fargo loom on Friday.
  • Germany's February exports fall by a bigger-than-expected 1.3% in a reminder to investors of trade-related weakness in the global economy.
  • Global crude prices touch fresh 2019 highs, taking Brent closer to $71 a barrel, as OPEC cuts, U.S. sanctions, a weaker dollar and strong jobs data combine to boost commodity markets.
  • U.S. equity futures suggest a modestly weaker open on Wall Street, snapping the longest streak of daily gains since October 2017, ahead of factory orders and employment trends data at 10:00 am Eastern Time.

Market Snapshot

Global stocks eased from multi-month highs Monday, putting Wall Street's longest winning streak in nearly two years at risk, as investors adopted a cautious stance heading into the U.S. earnings season and interpreted mixed statements on trade talks between Washington and Beijing.

Around eight S&P 500 companies are set to report this week, including three of the country's biggest banks on Friday, as the first quarter earnings season kicks into high gear on the heels of solid job creation data at home and weakening economic signals from around the world.

Refinitiv estimates suggest first quarter profits for the S&P 500 will likely fall by 2.2% compared to the first three months of 2018, with revenues sliding by around 5%.

Investors, however, will likely be more focused on near-term estimates from the benchmark's biggest companies as they calibrate the chances of a so-called earnings recession, which occurs when profits decline for two consecutive quarters.  At present, the estimated second quarter earnings growth rate is 2.8%.

U.S. equity futures are suggesting a cautious start to the week, following a seven-day win streak for the S&P 500, the longest since October 2017, with contracts tied to the benchmark indicating a 3.8 point pullback. Futures tied to the Dow Jones Industrial Average, meanwhile, suggest a 115 point dip for the 30-stock average ahead of factory orders and employment trends data at 10:00 am Eastern Time.

General Electric (GE) - Get General Electric Company (GE) Report shares were an early mover of note, falling nearly 7% in pre-market trading after JPMorgan's Stephen Tusa, one of Wall Street's most influential analysts, lowered his rating for the struggling industrial giant and cut the group's price target.

Boeing (BA) - Get Boeing Company Report  was also on the move, falling 4.32% and taking 117 points from the Dow after the world's biggest planemaker said it would slow production of its flaghship 737 MAX aircraft following two fatal accidents that have raised serious concerns for the aircraft's safety.

Markets in Asia got off to a mixed start Monday, with shares in China rising sharply on a statement from the government that indicated target reductions in the so-called reserve requirement ratio of the country's banks. The move would ostensibly free up capital in order to increase lending and stoke growth in the world's second largest economy.

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Gains were quickly pared, however, amid the broader market sentiment as investors parsed recent statements on U.S.-China trade talks as well as news that a near-term summit between Presidents Donald Trump and Xi Jingping appears unlikely.

The MSCI Asia ex-Japan index headed to the end of the trading session with a 0.03% gain while the Nikkei 225 in Tokyo slipped 0.21% to close at 21,765.05 points.

European stocks were weaker at the start of trading Monday, as well, with the Stoxx 600 benchmark slipping 0.18% by mid-day in Frankfurt as bourses around the region gave back gains from last week's multi-month highs.

Germany's DAX performance index lead regional benchmarks to the downside, falling 0.376% following weaker-than-expected reading for the country's February exports and weakness in the country's auto sector, which is prepping for major EU fines linked to emissions.

Britain's FTSE 100 fell 0.1%, caught between gains for energy stocks on the back of rising oil prices, which tend to support the internationally-focused benchmark, and the ongoing uncertainty linked to cross-party Brexit talks, where Prime Minister Theresa May has yet to reach an agreement with opposition party leader Jeremy Corbyn even as the now-extended Brexit deadline looms on April 12. 

Away from equities, benchmark 10-year Treasury bond yields traded back below the 2.5% mark in early European dealing, with the different between 10-year and 2-year notes narrowing to around 12.5 basis points following Friday's March employment data, which showed better-than-expected job creation of 196,000 but disappointing gains for average hourly earnings of only 0.1%.

The mixed reading, alongside comments from President Trump calling for more bond purchases from the Federal Reserve, have put downward pressure of government bond yields ahead of a series of three Treasury auctions this week that will raise around $78 billion. 

Global oil prices touched fresh 2019 highs overnight, buoyed by Friday's solid jobs gains, a weaker U.S. dollar, ongoing OPEC production cuts and U.S. led sanctions on the sale of crude from Iran and Venezuela.

Brent crude contracts for June delivery, the global benchmark for oil prices, were marked 48 cents higher from their Friday close in New York and changing hands at $70.82 per barrel while WTI contracts for May delivery were seen 42 cents higher at $63.80 per barrel.