The Thursday Market Minute

  • Global stocks mixed as reports of U.S.-China trade talk progress offset by dismal industrial data from German and concerns for a global manufacturing recession.
  • President Donald Trump will meet with China Vice Premier Liu He later today at the White House amid multiple reports of an imminent deal, although economic adviser Larry Kudlow cautions "we're not there yet".
  • German industrial orders plunged the most in two years in February, re-igniting concerns of recession risk in Europe's biggest economy.
  • Global crude prices hold near five-month highs as EIA data shows major U.S. stockpile increase, but data indicates it may be more closely linked to refinery outages than a lack of demand.
  • S&P 500 ends Wednesday at at 2,873.40 points, just 56.27 points from its all-time closing high.  
  • U.S. equity futures mixed ahead of weekly jobless claims data at 8:30 am Eastern Time as well as fourth quarter earnings from Constellation Brands before the opening bell.

Market Snapshot

Global stocks paused Thursday, with Asia snapping a five-day winning streak, as investors assessed reports of progress in U.S. China trade talks and worryingly weak economic data from German that continues to raise concerns of worldwide manufacturing recession.

China's Vice Premier and top trade negotiator, Liu He, will meet with President Donald Trump later today in the White House amid multiple reports that suggest the talks are nearing a conclusion.

Bloomberg has reported that China could agree to purchases of U.S. goods worth more than $1 trillion, as well as opening its markets to further American investment, in exchange for multi-year window in which to meet certain conditions on intellectual property and technology transfer protections. The Financial Times, meanwhile, said the two sides were close to a deal on most of the major issues, but were still negotiating ways in which China could implement them under U.S. monitoring.

White House economic adviser Larry Kudlow, however, struck a more pragmatic tone while speaking to reporters yesterday in Washington, saying there had been "good headway" made in this weeks talks before adding "we're not there yet." 

"We're covering issues that have never really been covered before, including enforcement," Kudlow said. " We hope this week to get closer."

Asia stocks eased for the first day in five as investors awaited formal news from Washington, with the region-wide MSCI ex-Japan index slipping 0.35% while Japan's Nikkei 225 ended the session little changed at 21,724.95 points.

Early indications from U.S. equity futures suggest a mixed start to the session on Wall Street, with contracts tired to the Dow Jones Industrial Average indicating a 20 point gain while those linked to the broader S&P 500, which is only around 2% from its all-time high, suggesting a 1.5 point bump ahead of weekly jobless claim and challenge job cuts data prior to the opening bell.

Despite the unnecessary and destructive actions taken by the Fed, the Economy is looking very strong, the China and USMCA deals are moving along nicely, there is little or no Inflation, and USA optimism is very high!

— Donald J. Trump (@realDonaldTrump) April 4, 2019

Boeing Inc. (BA - Get Report) shares pared earlier gains in pre-market trading after officials in Ethiopia said the 737 MAX 8 plane that crashed shortly after takeoff last month was airworthy and that pilots followed all proper procedures prior to the catastrophe that killed all 157 passengers on board.

Tesla Inc. (TSLA - Get Report) shares were indicated sharply lower after the clean-energy carmarker published weaker-than-expected first quarter deliveries and investors eyed a hearing in Federal court over founder and CEO Elon Musk's contempt battle with the U.S. Securities and Exchange Commission.

Constellation Brands (STZ - Get Report)  shares jumped 3% in early dealing after the Corona beer maker posted stronger-than-expected fourth quarter earnings Thursday after selling its low-end wine brand portfolio for around $1.7 billion.

The bullish tone this week, sparked by rebounds in service sector activity in China, Europe and elsewhere, has belied concerns for the health of the world's manufacturing sector, which has slowed growth in each of the four major global exporters.

That concerns was revealed again Thursday with a sharply weaker-than-expected 4.3% decline in German industrial orders for the month of February, the worst in two years, as Europe's biggest economy continues to suffer from its exposure to the U.S. China trade dispute.

Foreign orders were a particular concern, falling 6% globally, with a 7.9% slump from countries outside of the single currency area. 

The region's deeper near-term uncertainty, in the form of Britain's extended Brexit saga, also showed no signs of abating Thursday even after lawmakers voted narrowly in favor of a law that would require Prime Minister Theresa May to seek their approval before either leaving the EU or requesting an extension from Brussels ahead of the new April 12 deadline.

European stocks were modestly lower at the start of trading Thursday in Frankfurt, with the region-wide Stoxx 600 slipped 0.3% at the opening bell while benchmarks around the region recorded similar percentage declines. Britain's FTSE 100, meanwhile, was marked 0.5% lower at the pound steadied at 1.3172 against the U.S. dollar.

Global oil prices were also mixed at the start of trading in Europe, but still managed to hold near five month highs, following data from the Energy Information Administration yesterday that showed U.S. crude stockpiles surged by a much larger-than-expected 7.2 million barrels in the week ending on March 29.

The EIA report, which also indicated a record high production rate of 12.2 million barrels per day, was softened somewhat by the fact that much of the crude buildup was seen along the Gulf of Mexico, and not at the main delivery hub in Cushing, Oklahoma, suggesting it was more related to short-term refinery closures than a lack of global demand.

Brent crude contracts for June delivery, the global benchmark for oil prices, were marked 33 cents higher from their Wednesday close in New York and changing hands at $66.64 per barrel while WTI contracts for May delivery were seen 26 cents lower at $62.72 per barrel.