The Wednesday Market Minute

  • Global stocks edge cautiously higher, with bond market movements dictating sentiment, as investors growing increasingly concerned over weak U.S. economic data.
  • U.S. Treasury curve remains inverted between 3-month bills and 10-year notes after tipping for the first time since 2007 last week.
  • U.K. Prime Minister Theresa May could announce a date for her departure later today in order to get enough lawmakers on board to support her twice-defeated Brexit deal.
  • Global oil prices mixed higher as OPEC+ production cuts add support to prices that remain near four-month highs ahead of EIA stockpile data.
  • U.S. equity futures suggest a solid open on Wall Street ahead of January trade data at 8:30. am Eastern Time.

Market Snapshot

Global stocks edged cautiously higher again Wednesday, with gains in Asia built on hopes of fresh stimulus from Beijing, as investors continue to track moves in the bond market amid weakening economic data in the United States and stalled China trade talks.

U.S. Treasury bond yields continued to dictate sentiment in overnight trading, with stocks rising as benchmark 10-year notes rose from yesterday's 2017 low of 2.377% following a sharp decline in February housing starts, only to pare gains as they retreated closer to 2.40% as investors favored guaranteed returns over equity market risks.

The yield gap between 3-month Treasury bills and 10-year notes, meanwhile, extended to minus 5 basis points, creating a so-called inverted yield curve, a continue which Federal Reserve studies have shown to predate every U.S. recession for the past 60 years.

A steeper-than-expected decline in profits for China's major industrial companies, which fell 14% over the first two months of the year to a 2011 low, rattled regional investors who have been concerned of a lack of progress in trade talks between Washington and Beijing, although China stocks rebounded on hopes the government would deepen their fiscal response to the slowest pace of growth for the world's second largest economy in several decades.

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U.S. equity futures suggest a modestly positive start to the trading session Wednesday, after paring sharp gains last night, ahead of trade and export data at 8:30 am. Contracts tied to the Dow Jones Industrial Average are indicating a 36 point opening bell gain for the 30 stock average, while those linked to the S&P 500, which has slowed gains to just 1.22% this month, suggesting a 6.5 point gain for the broader benchmark. 

European stocks bumped 0.04% higher at the start of trading in Frankfurt, helped in part by a notably weaker single currency, which fell to 1.1275 against the U.S. dollar, while Britain's FTSE 100 gained 0.12% as the pound held at 1.3207 against the greenback. 

Prime Minister Theresa May is reportedly ready to indicate a date by which she will resign her position in order to convince recalcitrant lawmakers to support her twice-defeated Brexit deal, although political analysts aren't sure she'll find enough votes to push it over the line.

In the meantime, Parliament will vote on a series of "alternatives" to her plan later today, but, again, analysts think there's little chance the House will find a majority for any one option, even as the deadline to leave the European Union on April 12 looms ever-closer.

Global oil prices were mixed in early European trading, with Brent crude extending gains that have taken the global benchmark some 40% higher since hitting a multi-year low on Christmas Eve, as OPEC production cuts and sanctions on the sale of crude from Iran and Venezuela continue to disrupt price discovery.

A surprise increase in domestic crude supplies of 1.2 million barrels reported by the American Petroleum Institute, as well as a stronger U.S. dollar weighed on WTI prices ahead of today's official reading on stockpiles from the Energy Information Administration.

Brent crude contracts for May delivery, the global benchmark for oil prices, were marked 16 cents higher from their Tuesday close in New York and changing hands at $68.13 per barrel in early European dealing while WTI contracts for the same month, which are more tightly linked to U.S. gasoline prices, were seen 12 cents lower at $59.82 per barrel.