US Earnings Beats Shore Up Support, But Uncertainty Remains

Market action around the world has been all over the map overnight. Downward momentum from yesterday’s US selloff continued through Asia Pacific and European trading as traders reacted to mixed data from China. Meanwhile, ongoing political instability in the Middle East has continued to impact risk appetite and investor fear as Gold is up another 0.3% this morning, while Bitcoin is down 0.4% after dropping around 5.0% yesterday.   

Chinese GDP (5.3% vs street 5.0%) beat expectations but retail sales (3.1% vs street 4.5%) and industrial production (4.5% vs street 5.4%) were disappointing. This news, combined with continuing momentum from yesterday’s US selloff, weighed on Asia Pacific trading where the Hang Seng lost 2.1% and the Nikkei fell 1.9%. China-sensitive commodities have also struggled overnight with Copper falling 1.7% and US Crude slipping 0.5% In European trading, the Dax is down 1.1% and the FTSE has fallen 1.3%.

US index futures have been trying to bounce back and are currently flat (NASDAQ futures) to up 0.6% (Dow Futures) coming off yesterday’s major US index losses of 0.6% to 1.8%. Earnings season appears to be helping a bit, particularly the positive response to an earnings beat from UnitedHealth ($6.91 vs street $6.61, up 7.7% premarket). Other companies beating expectations today include Morgan Stanley, which is up 3.1% premarket, Bank of America, and Johnson & Johnson. United Airlines reports results after the close today, followed by insurer Travelers tomorrow morning.

Canadian consumer prices (2.9% vs previous 2.8%) ticked up slightly last month. Housing starts for the US (1.32M vs street 1.48M) and Canada (242K vs street 244K) were both slightly worse than expected. US industrial production (street 0.4%) is due at 9:15 am EDT. Fed Chair Powell and Bank of Canada Governor Macklem are both scheduled to speak at 1:15 pm EDT this afternoon. After the close the Canadian federal government announces its latest budget. Ahead of these announcements, US treasury yields continue to climb with the 10-year trading above 4.60%.

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