After two consecutive days of failed S&P ignition attempts, in which US stocks opened sharply higher only to close near the lows, on Wednesday the algos will try for the third consecutive time to escape the recent late-day selloff funk. S&P futures are higher after declining on Tuesday following a fresh personnel shakeup in the Trump administration and renewed US trade war speculation with China dampened investor sentiment.

European stocks rose modestly led by mining shares even as Asian shares fell despite stronger than expected Chinese economic data. 

Equity markets were attempting to recover after Tuesday’s hefty losses, encouraged by stronger than expected Chinese factory data, but struggled to overcome fears of a global trade war as well as the prospect of political uncertainty in the United States. “As long as the threat of protectionism and a trade war remains, markets will remain vigilant,” Rabobank analysts told clients according to Reuters.

The latest set of tariffs, reportedly targeting Chinese tech, electronics, and telecoms, were revealed by sources hours after Trump abruptly fired Secretary of State Rex Tillerson. Tillerson’s exit follows that of economic advisor Gary Cohn, a strong free trade proponent. Since Trump took office in 2017 as many as 35 senior officials from his administration have walked out, including Tillerson, according to Citi.

The market probably correctly viewed this move as weakening internal White House opposition to some of Trump’s less market-friendly policies, in particular, the President’s trade policy,” Daiwa strategist Mantas Vanagas said, quoted by Reuters.

The negative momentum faded somewhat in Europe, with a pan-European equity index up 0.24% after falling 1% on Tuesday. That left MSCI’s all-country equity index down 0.12% its second day in the red, although a rebound in the US will likely push it back in the green.

European stocks rose modestly after opening in the red after Tuesday’s plunge as traders assess the implications of a shakeup in the Trump administration amid corporate updates from companies including Inditex SA and Prudential Plc. The Stoxx Europe 600 Index rises 0.3%, with all major sectors with the exception of utilities are trading higher in the Euro Stoxx, while much of the morning stock movers have been dictated by company earnings, with Adidas (+9%) shares sitting at the top of DAX. Elsewhere, the IBEX underperforms its counterparts as index heavyweight Inditex (-3%) slipped after highlighting concerns over FX headwinds. Zara owner Inditex drops after reporting a slowdown in sales and its weakest profitability in a decade, while U.K. insurer Prudential rises after saying it divested 12 billion pounds ($16.7 billion) of annuities from its U.K. portfolio and plans to spin off its M&G Prudential unit. Miners were the best-performing industry group after Goldman Sachs analysts said the sector is enjoying robust global demand and after China reported strong expected Chinese economic .

There was no bounce earlier in Asia, where markets followed the negative US lead with the Nikkei (-0.9%), Kospi (-0.3%), Hang Seng (-0.5%) and Shanghai Comp (-0.6%) all down. The latest batch of mixed activity indicators were released in China early this morning. Industrial production in February rose unexpectedly to +7.2% ytd yoy (vs. +6.2% expected; +6.6% previously), as did fixed asset investment (+7.9% yoy vs. +7.0% expected; +7.2% previously) while retail sales were slightly below expectations at +9.7% yoy (vs. +9.8%) from +10.2% in the month prior. As shown in the chart below, Chinese macro data has been disappointing in recent months so the modest upside surprise in factory orders was a welcome change.


In global FX, the dollar pared an early decline as the euro felt some heat from another Draghi reference to the exchange rate, while the Yen rose following continued focus on the Moritomo scandal that has again rocked the Abe administration. A lackluster London session saw the pound shedding gains ahead of a May speech over the U.K.’s relationship with Russia. Bloomberg breaks down the latest overnight FX action:

  • The euro set a day low of $1.2364 in early London trading after ECB President Draghi said in a speech that adjustments to monetary policy will remain predictable as policymakers look for further evidence that inflation dynamics are moving in the right direction
  • He also said the central bank needs to monitor developments in the common currency closely as its appreciation since the beginning of the year cannot be explained solely by economic expansion
  • AUD/USD saw leveraged demand on stronger-than-expected gains in China’s factory output and investment growth
  • Kiwi shook off weaker-than-estimated 4Q current-account balance to climb on global fund demand to buy New Zealand’s bonds after Tuesday’s issuance
  • Treasuries and euro-area bonds were little changed. German 10-year government bond yields approached one-month lows and currently stand 20 basis points below this year’s peak at 0.60 percent, following a soft 30Year debt auction.

    Economic data include retail sales and PPI. Williams-Sonoma and Signet Jewelers are among companies due to release results

    Market Snapshot

  • S&P 500 futures up 0.3% to 2,776.00
  • STOXX Europe 600 up 0.3% to 376.55
  • MXAP down 0.5% to 178.18
  • MXAPJ down 0.4% to 587.85
  • Nikkei down 0.9% to 21,777.29
  • Topix down 0.5% to 1,743.21
  • Hang Seng Index down 0.5% to 31,435.01
  • Shanghai Composite down 0.6% to 3,291.38
  • Sensex down 0.4% to 33,720.90
  • Australia S&P/ASX 200 down 0.7% to 5,935.31
  • Kospi down 0.3% to 2,486.08
  • German 10Y yield fell 1.0 bps to 0.609%
  • Euro down 0.2% to $1.2370
  • Brent Futures down 0.2% to $64.51/bbl
  • Italian 10Y yield fell 0.9 bps to 1.737%
  • Spanish 10Y yield rose 0.8 bps to 1.405%
  • Brent Futures down 0.2% to $64.51/bbl
  • Gold spot down 0.2% to $1,324.41
  • U.S. Dollar Index up 0.2% to 89.83
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