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Trade Talks End On Positive Note, EU Hits Fresh Three Week High, US Equities Up On Trade/Earnings Optimism

Thomas Hughes
US equity futures indicated a broadly higher open in the early Wednesday pre-market session. The move was driven by optimism a trade deal would soon be reached that both China and the US could agree on, and also expectations for the upcoming earnings season. Later in the day, the FOMC minutes will be released.

Asian Markets Move Broadly Higher As Trade Talks End

Asian market moved broadly higher in the wake of US/Sino mid-level trade-talks. The talks had originally been scheduled to take place over two days but were extended to three giving traders hope positive developments were at hand. US trade representative Ted McKinney, Under-Secretary of Agriculture for Trade and Foreign Agricultural Affairs says the talks “went just fine”. China’s Foreign Ministry says the results will be released soon.

The Hong Kong Heng Send Index led today’s gains on improving outlook for international trade. The index surged more than 2.25% and is likely to move higher in the next few days. The Shanghai Composite posted a more modest 0.71% as traders remain cautious. While the news is good there is still no firm deal and fear talks could deteriorate if China is not willing to make the types of reforms the Trump Administration is asking for.

The Korean Kospi advanced 1.95% on a rebound in tech. Shares of Samsung were up nearly 4.0% as traders shrug off yesterday’s weak earnings report in favor of trade optimism and the impact trade will have on global GDP growth. The Nikkei advanced 1.1% and was closely followed by the Australian ASX.

EU Equities Markets Hit A Fresh Three Week High

EU equities indices advanced on trade optimism and hit a fresh three-week high in early Wednesday trading. At midday, the French CAC was leading with a gain of 1.35% but the German DAX was right behind, the UK FTSE 100 was trading closer to 1.0%. The EU is not directly involved with the US/China trade dispute but is one of China’s largest trading partners. The EU will benefit from a trade deal that allows China’s, and the US, economic activity to reaccelerate.

In local news, traders are eyeing an ECB policy meeting scheduled for today and tomorrow. The central bank is expected to release its policy statement tomorrow and could have a significant impact on currency markets. The bank is not expected to alter policy but may alter its statement. The EU central bank is largely expected to begin tightening policy later this so changes to the outlook will be market moving.

US Equities Rise On Trade/Earnings Optimism, Politics Caps Gain

US equity futures indicated a broadly higher open in the early Wednesday pre-market session. The move was driven by optimism a trade deal would soon be reached that both China and the US could agree on, and also expectations for the upcoming earnings season. About 5% of the S&P 500 has released earnings so far for the fourth quarter of 2018, the bulk of reports are expected to be released over the next four weeks.

This morning Constellation Brands reported a beat on top and bottom line estimates but shares were hammered down -12% on weak forward guidance. Later in the day, the FOMC minutes will be released. 

This article was originally posted on FX Empire

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