North American equity-index futures slumped alongside stocks in Europe this morning, as weak data from two of the world’s largest economies overshadowed a de-escalation in the US-China trade war.
The Trump administration announced yesterday that it would not impose new 10 percent tariffs on China-made consumer goods, such as cell phones, laptops and toys, until December; going as far as to remove a selection of tariff-targeted goods from its list entirely, according to US trade representative, Robert Lighthizer.
Asian stocks gained overnight, tracking Tuesday’s move on Wall Street, where the US benchmark S&P index advanced +1.56% amid the market’s initial reaction to the tariff delay, even as recent Chinese economic data missed estimates overnight.
The debilitating effect of trade tensions was made visible in Chinese Industrial Production data, where the country grew 4.8% in July, significantly lower than the 6.3% increase in June and below expectations of 5.9% growth.
Setbacks were also recorded around the world in Europe, where data from Europe's largest economy, Germany, recorded a second quarter contraction. Germany’s GDP has fallen 0.1% quarter-over-quarter, while annual growth slowed to 0.4% in the second quarter, down from 0.9% in Q1.
Meanwhile, Hong Kong’s airport resumed to normal operation, after a chaotic night of protests, in which demonstrators beat and detained two suspected infiltrators. Hong Kong’s Hang Seng index traded up +0.08% on Wednesday.
Ahead, in today’s economic calendar, Wednesday includes; Import and Export Prices for July at 8:30am EST, followed by Crude Oil Inventories for the week ended Aug. 9 at 10:30am EST.
Earnings reports are expected today from; Cisco Systems (CSCO), Macy's (M), Luckin Coffee (LK) and Agilent Technologies (A).
TODAY'S TOP HEADLINES
China, Germany & Trade: Trade War Takes Toll on Economic Growth in Germany, China. (The WSJ)
Germany’s economy shrank in the second quarter and China reported a raft of weak data, sharpening fears over how far the spillover from the trade dispute between Washington and Beijing is damaging the prospects for global growth.
Economy: Yield Curves Invert in US and UK as ‘Doom and Gloom’ Spreads. (Bloomberg)
The stream of investors seeking refuge in the safest parts of the market has triggered yet another recession warning, with yield curves inverting from the US to the UK.
Today's Economical Announcements.
08:30AM - ★★☆ - Export Price Index (MoM) (Jul) (Previous: -0.7%)
08:30AM - ★★☆ - Import Price Index (MoM) (Jul) (Previous: -0.9%)
10:30AM - ★★★ - Crude Oil Inventories (Previous: 2.385M)
STOCKS IN THE SPOTLIGHT
Pre-Market Movers & News Related Stocks.
Myriad Genetics (MYGN): [EARNINGS] Reported adjusted quarterly profit of 41 cents per share, missing consensus estimates by 6 cents a share. The drugmaker’s revenue also came in below Wall Street forecasts. The company cited lower-than-expected reimbursements for its expanded carrier screening test, but said it is more optimistic going forward.
Tilray (TLRY): [EARNINGS] Reported an adjusted loss of 32 cents per share, wider than the 25 cents a share loss that analysts were expecting. The cannabis producer’s revenue beat forecasts, and said the company would “potentially” be announcing new supply deals in the coming months.
Luckin Coffee (LK): [EARNINGS] Reported an adjusted quarterly loss of 48 cents per share, wider than the 43 cents a share consensus estimate. Revenue beat estimates, however, in Luckin’s first report as a public company. Luckin is rapidly opening new stores as it tries to overtake Starbucks in the China market.
Canada Goose (GOOS): [EARNINGS] Posted a smaller-than-expected loss for its latest quarter, with revenue well above analysts’ forecasts. Canada Goose said its sales grew in all geographical regions, and it is maintaining its prior full-year forecast.
RealReal (REAL): [EARNINGS] Lost 28 cents per share for its latest quarter, 5 cents a share less than Wall Street had predicted. The online seller of secondhand luxury goods also saw revenue beat estimates, in its first quarterly report since going public in late June.
Qualcomm (QCOM): [NEWS] Named former Palo Alto Networks Chairman and CEO Mark McLaughlin as chairman, replacing Jeff Henderson.
CBS (CBS): [DOWNGRADE] Downgraded to “underperform” from “outperform” at Bernstein, following the announcement of its planned merger with Viacom. The price target was also cut to $46 per share from $62 a share. The firm feels CBS will lose more from inheriting Viacom’s structural problems than it will gain from any synergies.
WWE (WWE): [RATING] Rosenblatt Securities rates the World Wrestling Entertainment parent’s stock as a “buy” in new coverage, with a price target implying 30% upside. The firm said the stock represents one of the best ways to play the “content is king” thesis.
Bristol-Myers Squibb (BMY): [UPGRADE] Upgraded to “overweight” from “neutral” at Atlantic Equities, which thinks the current level of the shares represents a “highly compelling value opportunity.” The firm points to increased clarity on the Celgene acquisition process, as well as strong cash-flow generation, among other factors.
GAINERS: AIMT, APPN
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