The Wednesday Market Minute

  • Global stocks edge higher on concerns over the fate of U.S.-China trade talks and further signals of slowing growth in the world's biggest economies.
  • Japan's December exports fall to the lowest level in two years, thanks to a sharp decline in China shipments, while the BoJ cuts inflation forecasts and pledges to keep 10-year rates at zero percent.
  • White House Economic Adviser Larry Kudlow denies reports of cancelled U.S.-China trade talks, but says President Trump won't "back down' on demands for structural changes.
  • Global crude trades higher as investors bet on potential China stimulus to kick-start demand in the world's biggest energy importer.
  • U.S. equity futures suggest a stronger open on Wall Street thanks to stronger-than-expected ahead of earnings from Comcast, Procter & Gamble and IBM.

Market Snapshot

Global stocks edged higher Wednesday with investors focused on the fate of U.S.-China trade talks and further signals of a slowing global economy that have blunted sentiment in equity markets around the world.

Japan joined the list of recent data weakness Wednesday, reporting the biggest slump in exports in at least two years last month as sales to China, its most important trading partner, fell 7% over the final month of the year. That was followed by a cut in inflation forecasts for the Bank of Japan and a pledged to keep 10-year bond rates at zero percent in order to stoke consumer prices and prevent the world's third largest economy from tipping into recession.

"Japan's economy is likely to continue on an expanding trend through fiscal 2020," the BoJ said.  "Overseas economies are expected to continue growing firmly on the whole, although various developments of late warrant attention such as the trade friction between the United States and China."

The ongoing global slowdown, which was articulated by cuts to growth forecasts by the International Monetary Fund earlier this week, was pared with reports of stalled progress in trade talks between Washington and Beijing, which White House Economic Adviser Larry Kudlow suggested were getting bogged down by China's resistance to tackle structural reforms and address issues such as intellectual property theft.

Kudlow denied reports, however, of cancelled talks between the two sides, comments that gave some late hour support to trading in New York last night and stablized markets overnight in Asia, where the MSCI ex-Japan index slipped 0.1% and the Nikkei 225 ended the session only 0.14% at 20,593.72 points.

U.S. equity futures suggest a bit more optimism at the start of trading on Wall Street Wednesday, however, with contracts tied to the Dow Jones Industrial Average indicating a 200 point gain and those linked to the S&P 500 guiding to a 13 point advance after last night's 1.42% decline.

Corporate earnings will again dominate pre-market trading, however, with updates expected from Comcast Corp.  (CMCSA) , Proctor & Gamble (PG) , Texas Instruments (TXN) and Kimberly Clark Corp. (KMB) Ford Motor Co. (F) will report after the close of trading.

IBM Corp. (IBM) shares were indicated sharply higher in pre-market trading Wednesday after the iconic software firm posted stronger-than-expected fourth quarter earnings and said it recent acquisition of Red Hat Inc. (RHT) would help boost cloud computing sales in 2019.

IBM shares were marked 7.17% higher in pre-market trading Wednesday, indicating an opening bell price of $131.30 each, a move that would trim the stock's three month decline to around 10% and value the Armonk, New York-based group at just over $118 billion.

European stocks followed Asia with weakness at the opening bell, but stronger-than-expected results from French retailer Carrerfour SA (CRRFY) lifted the broader sector and helped the Stoxx Europe 600 index into a 0.4% gain by mid-day in Frankfurt while Britain's FTSE 100 fell 0.20% lower in London.

Global oil markets were active overnight and in the early European session, with prices rising thanks to both a weaker U.S. dollar and comments from China that suggested the government was ready to increase fiscal stimulus in order to kick-start growth in the world's second largest economy - and its biggest energy importer.

Data from earlier this week from China showed a solid run-rate for the nation's refineries last year, equaling around 12.2 million barrels per day, as industrial activity hotted up for the final month of the year. Last week's U.S. rig count from Baker Hughes, which showed the number of domestic installations fall to the lowest level since May 2018, has also raised questions about the pace of U.S. production.

Brent crude contracts for March delivery, the global benchmark, were marked 74 cents higher from their Tuesday close in New York and changing hands at $62.24 per barrel while WTI contracts for the same month were marked 54 cents higher at $53.55 per barrel.