2 Months : From Oct 2019 to Dec 2019
By Anna Isaac
--British pound gains on Brexit hopes
--Turkish lira climbs as investors digest U.S. sanctions
--Chinese stocks drop on poor economic data
U.S. stock futures edged higher Tuesday as investors geared up for fresh cues on the health of American corporations with the start of the new earnings season.
Futures tied to the Dow Jones Industrial Average gained 0.3%. Shares in JPMorgan Chase, the nation's largest bank by assets, rose 1.8% in premarket trading after the banking giant beat profit expectations. Goldman Sachs Group dropped about 1.6% as earnings came in below Wall Street estimates. A host of other major banks and corporations also reported earnings Tuesday morning.
The U.S. Federal Reserve could cut its key interest rate again to cushion the economy against threats to growth, Federal Reserve Bank of St. Louis President James Bullard said Tuesday while speaking to investors in London. The U.S. economy is slowing and faces a number of "downside risks" that could require a further "insurance" move from policy makers, Mr. Bullard said.
The yield on the U.S. 10-year Treasury fell to 1.691%, down from 1.748% Friday. The bond market was closed Monday for the nation's Columbus Day observance.
Meanwhile, equities across Europe posted tepid gains as investors continued to try to assess the probability of the U.S. and China ending the trade war after both sides said last week that they'd made progress toward a partial deal. The pan-continental Stoxx Europe 600 gauge rose 0.4%.
"Markets are fairly muted because this should actually be viewed as a cease-fire rather than a deal," said Edward Park, deputy chief investment officer at Brooks Macdonald Asset Management. The only major progress was that the U.S. shelved additional tariffs that had been scheduled to go into place this week, he said.
The British pound ticked higher as investors speculated that the U.K. may reach a deal with the European Union this week. The currency advanced almost 0.3% against the U.S. dollar, while the equity benchmark FTSE 100 index dropped 0.3%.
The EU's chief Brexit negotiator, Michel Barnier, told reporters early on Tuesday that reaching a deal with the U.K. was still possible following intense talks. Officials on both sides say gaps between the U.K. and EU have narrowed, but obstacles remain before a deal can be completed.
The talks have gone from "zero-to-hero" in record time, said James Athey, senior investment manager at Aberdeen Standard Investments.
"Everybody seems to be saying we can move forward, we can get something done," Mr. Athey said. "That's obviously a huge move forward."
Elsewhere in Europe, shares in fintech firm Wirecard fell about 18% in Germany following a report in the Financial Times about its accounting practices. Internal documents from the payments company point to a concerted effort to fraudulently inflate sales and profits, the newspaper said. Representatives for Wirecard said the company "categorically rejects these allegations of impropriety."
The Turkish lira climbed 0.9% against the dollar, reflecting investors' relief that President Trump had opted to impose "relatively mild" sanctions on the country, analysts at Rabobank's research unit said in a note to clients.
In Asia, Chinese stocks fell as fresh economic data added to concerns about weaker growth prospects and the government's ability to strike a trade agreement with the U.S.
The Shanghai Composite gauge dropped 0.6% as official data showed inflation reached a near six-year high last month, driven by rising pork prices. This comes amid signs of slowing growth and trade tensions for the world's second-largest economy.
"China's not going to change its core economic policy to placate Washington, be it on intellectual property or similar," said Rory Green, an economist at investment research firm T.S. Lombard. "They are accepting slower growth, they are not going to do a big credit stimulus as we've seen in the past; markets are slowly realizing that."
In commodities, Brent crude, the global benchmark for oil, dropped about 0.3%.
Write to Anna Isaac at email@example.com
(END) Dow Jones Newswires
October 15, 2019 09:03 ET (13:03 GMT)
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