The Wednedsay Market Minute

  • Global stocks mixed amid conflicting U.S. data and headline geo-political risks in both Europe and Asia.
  • Pound trades at four-month high after Prime Minister Theresa May allows for possible delay Britain's March 29 Brexit deadline.
  • Global oil prices bump higher after U.S. stockpiles fall by 4.2 million barrels and OPEC+ members signal willingness to hold collective production cuts.
  • U.S. equity futures suggest modest declines on Wall Street ahead of House testimony from Fed chair Jerome Powell and earnings from Best Buy, Lowe's, HP and United Health.

Market Snapshot

Global stocks were mixed Wednesday, with modest gains in Asia offset by a weaker start to the trading session in Europe, as investors sifted through dovish testimony from Federal Reserve chairman Jerome Powell, conflicting U.S. economic data and an increasing complicated series of Brexit votes in U.K. parliament.

President Donald Trump's summit with North Korean leader Kim Jong Un in Hanoi also rests uneasily on investors' list of geo-political risks this week, with the dollar already rattled by tensions between nuclear-armed India and Pakistan following a suicide bomb in the disputed region of Kashmir earlier this month.

Powell's testimony to the Senate banking committee yesterday, which will be followed today by an appearance before a similar quorum in the House, did offer investors some respite from concerns that the Fed was still aiming at a late 2019 rate increase, telling lawmakers he was in "no rush to make a judgement" on that given the mixed data points in the world's biggest economy.

Powell said the "baseline outlook is a good one" but cautioned on moderating growth in major economies around the world.

"We have the makings of a good outlook and our (rate-setting) committee is really monitoring the crosscurrents, the risks, and for now we are going to be patient with our policy and allow things to take time to clarify," Powell said.

As he spoke, the Commerce Department said housing starts fell 11.2% in December, data that had been delayed thanks to the 35-day government shutdown, and came in at the lowest level in two years. That, however, was followed by a 9.7 point bump higher in the Conference Board's measure of consumer confidence for the month of February, suggesting solid resilience in the economy's most import sector.

Investors are still more comfortable treading lightly into today's session, however, with futures contracts tied to the Dow Jones Industrial Average indicating a 103 point pullback and while those linked to the S&P 500 are suggesting an 11.5 point decline for the broader benchmark.

Best Buy Co. Inc. (BBY)  surged nearly 11% after the electronics retailer posted stronger-than-expected fourth quarter earnings Wednesday, and forecast solid full-year profits, as softer mobile phone sales were offset by gains in wearables, appliances and gaming.

General Electric (GE) shares were another notable early market mover, rising 1.22% after CEO Larry Culp told investors he was focused on reducing the conglomerate's debt load and boosting its dividend to a level "in line with our peers" after one of the worst years on record for the iconic industrial giant.

Lowe's Companies Inc. (LOW)  also bounced higher after stronger-than-expected fourth quarter earnings Wednesday but noted weakness in Canada's housing market would continue over the near term.

Lowe's shares were marked 2.8% higher in pre-market trading immediately following the earnings release, indicating an opening bell price of $108.00 each, a move that would take its three-month gain to around 17.8%, more than double the gain recorded by larger rival Home Depot (HD) .

European stocks were also on the back foot in early Wednesday trading, as the softer U.S. dollar bumped the euro to 1.1385 and held back gains for export-related stocks around the region.

The benchmark Stoxx 600 was marked 0.4% lower by mid-day in Frankfurt , with similar percentage declines for the DAX performance index in Germany and France's CAC-40.

Britain's FTSE 100 was also trading around 0.8% into the red, thanks in part to gains for the pound, which traded at a four-month high of 1.3312 against the U.S. dollar following a capitulation by Prime Minister Theresa May to allow lawmakers to vote on a potential delay to the U.K.'s March 29 Brexit deadline.

May, however, also opened the door for series of votes that could further muddy the already complicated Brexit process, and although the prospect of a "no deal" exit has dissipated, there are still major risks ahead for those on both sides ahead of today's Parliamentary debate.

Global oil prices edged higher in early European trading, with investors citing signals from OPEC+ member nations to stay disciplined on their vow to reduce collective output by 1.2 million barrels per day through this spring and data from the American Petroleum Institute that showed domestic crude stockpiles fell by 4.2 million barrels last week.

Saudi Arabia's powerful energy minister, Khalid al-Falih, also hit back at Trump's "take it easy" Tweet from earlier this week, telling reporters at an energy conference in Riyadh that "we are taking it easy ... the twenty-five countries are taking a very slow and measured approach. Just as the second half of last year proved, we are interested in market stability first and foremost."

Brent crude contracts for April delivery, the global benchmark, were marked 690 cents higher from their Tuesday close in New York and changing hands at $66.10 per barrel while WTI contracts for the same month were seen $1.10 higher at $56.60 per barrel.

 

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