The Wednesday Market Minute

  • Global stocks booked modest gains, but investors remain highly sensitive to the U.S. corporate earnings story after disappointing updates from Caterpillar and 3-M pushed domestic stocks close to the lowest levels of the year yesterday.
  • Safe-haven trading continues to dominate global flows, with investors favoring the U.S dollar and the yen amid continued uncertainty over growth, rates, trade and geo-politics.
  • President Donald Trump renews his criticism of Jerome Powell, saying he might regret naming the Wall Street veteran to the Fed Chair post.
  • Global oil prices extend declines as waning demand and a stronger dollar offset Iran sanctions impact, with WTI falling to the lowest level since August. 
  • U.S. stocks are called lower, with Dow futures indicating a 110-point opening bell advance after better-than-expected earnings from Boeing as investor shift focus to Q4 and 2019 outlooks.

Market Snapshot

Global stocks rebounded modestly Wednesday, as new moves to support the Chinese economy boosted markets in Asia and solid corporate profits lifted Europe shares higher at the opening bell, but investors remain sensitive to the U.S. earnings story amid signs of a slowing world economy and rising equity volatility ahead of some key tech-sector reports later this week. 

Slowing China growth, the threat of rising U.S. interest rates and the twin European risks of Italy's budget crisis and the ongoing -- while going nowhere -- Brexit negotiations have all combined to sap investors confidence and hold down any hope of an extended equity market rally into the end of the year. 

"But significant for global equity investors, the US equities Teflon persona was seriously questioned as price action suggested there is one asset class investors fear: equities," said OANDA markets head of trading Stephen Innes. "And like migratory birds heading south for winter, the icy chill enveloping global stock markets has sent investors flocking to safe to haven assets."

U.S. equity futures, which first suggested investors aren't quite ready to reach for cheaper U.S. stocks ahead of today's busy earnings slate, which includes quarterly numbers from AT&T (T , Ford Motor Co. (F , Microsoft (MSFT  Northrup Grumman (NOC and United Parcel Service (UPS  , swung higher after Boeing (BA beat Street forecasts and raised its profit and revenue guidance for the full year, sending shares 4.3% higher in pre-market trading at $365.06 each.

The world's biggest planemaker also boosted its full year revenue guidance by around $1 billion and said it sees better-than-expected profit margins in its commercial aerospace business. 

Contracts tied to the Dow Jones Industrial Average  indicate an 110 point opening bell gain for the 30-stock average, following yesterday's 126-point slide that at one stage saw the bellwether come within 50 points of falling into negative territory for the year after disappointing earnings from industrial giants Caterpillar (CAT and 3M Co (MMM .

The S&P 500 , which is now clinging to a year-to-date gain of 2.5%, is indicated flat while the Nasdaq Composite is expected to gain around 3 points at the start of trading.  

Texas Instruments (TXN stock is set to open at the lowest level in more than a year Wednesday after the chipmaker posted weaker-than-expected third quarter sales and cautioned it was heading into a "softer market" in the months ahead.

Texas Instruments shares were marked 6.23% lower from their Tuesday close in pre-market trading, indicating an opening bell price of $94 each, the lowest since October 2017 and a move that would extend its year-to-date decline past 10% and value the Dallas, Tx.-based group at just over $91 billion.

AT&T slipped after the telecoms giant missed analyst's forecasts for its third quarter earnings but added an unexpectedly higher number in wireless subscribers following its $85 billion takeover of Time Warner Inc.

AT&T shares were marked 2.6% lower following the earnings release, indicating an opening bell price of $32.16 each, a move that would extend the stock's year-to-date decline past 15% and value the Dallas, Tx.-based group at around $235 billion.

The global market caution was reflected in today's modest modest rebound, which sprung in part from details of around $100 billion in fixed investment project commitments from China's state planner, a sign the government will make good on its vow to support the flagging economy, which grew at the slowest pace in 2009 last quarter and whose stocks are trading more than 20% from their recent peak.

Japan's Nikkei 225 edged 0.37% higher to close at 22,091.18 points and although Chinese shares booked modest gains of around 0.3% for the Shanghai Composite, the MSCI Asia ex-Japan index slipped 0.11% into the final hours of trading. 

European stocks were firmer, with the Stoxx 600 rising 1.1% by mid-day in Frankfurt on the back of stronger-than-expected earnings from luxury goods makers LVMH  (LVMUY and Kering SA (PPRUY , as well as U.K.-based investment bank Barclays plc  (BCS , although gains were capped by a notably softer reading for manufacturing activity in Germany, the region's biggest economy, which slipped to 52.3 in October from 53.7 in September, according to IHS Markit's flash PMI data. 

Deutsche Bank (DB shares continued to test their all-time lows Wednesday, even as management at Germany's biggest lender insisted their turnaround plan would swing the bank into profit, after stronger-than-expected third quarter earnings failed to offset a patchy full-year outlook.

Investors, however, were less convinced, sending Deutsche Bank shares down down more than 4.5% in early Frankfurt trading, to within pennies of its all-time low of €8.755, before paring the decline to around 3.84% and €8.95 each, a move that still leaves the stocks nursing a year-to-date loss of 43.55%.

Away from equities, the U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.4% higher at 96.36 amid global flows into safe-haven assets and ongoing bets that the Federal Reserve will continue to hike rates in order to keep domestic inflation in check. 

That move, however, comes on the heels of yet more criticism of Fed Chairman Jerome Powell from President Donald Trump, who told the Wall Street Journal that while it's "too early to tell", he "maybe" regrets naming the financial market veteran to head the nation's central bank. 

"Every time we do something great, he raises the interest rates," Trump was quoted as saying in an interview published Wednesday. 'To me the Fed is the biggest risk, because I think interest rates are being raised too quickly."

The CME Group's FedWatch tool, which assigns rate hike probability based on futures contracts, suggests bets on a December move have fallen to 72.8% from around 81% at the start of the week, while the odds of a March increased has slipped 10 basis points to 46.5%.

Global oil markets were also influenced by the stronger U.S. dollar, as well as weakening demand signals from China and Europe, with prices extending declines again Wednesday following earlier comments from the Saudi energy minister that suggested the Kingdom, the world's largest producer, would be prepared to boost output in order to offset the impact of looming sanctions on the sale of Iranian crude, which kick-in on November 4.

Brent crude contracts for December delivery, the global benchmark, were seen 14 cents lower from their Tuesday close in New York and changing hands at $76.30 per barrel, while WTI contracts for the same month, which are more tightly liked to U.S gas prices, were seen 28 cents higher at $66.71 per barrel.