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U.S. Shares Picking Up Positive Vibe from Europe, Asia

James Hyerczyk

The major U.S. stock indexes are all pointing toward higher openings on Thursday, following strong performances in Europe and Asia. Investors are saying stabilizing global bond yields are helping to temper concerns over slowing economic growth, boosting demand in higher-risk assets. Investors are also responding to the fluctuations in the Chinese yuan, after the People’s Bank of China set the official reference rate for the Chinese currency at 7.0039 yuan per dollar on Thursday – the weakest level since April 21, 2008.

Adding to the shift in sentiment is a stronger than expected trade report from China. Chinese customs data revealed exports for July rose unexpectedly, growing 3.3% on-year. Imports for the month fell 5.6% on year, which left China with a trade surplus of $45.06 billion in July, compared to a $50.98 billion surplus in June, Reuters reported.

Traders said that the numbers could be reflecting front-loading by manufacturers. Adding that it is proving to be time consuming to shift factories outside of China during the current trade war. In the meantime, the effects of the U.S. tariffs on China are being limited while trade between China and other countries continues. Additionally, the depreciation in the Chinese yuan is also helping the world’s second largest economy export its goods beyond the U.S.

European Markets

European investors also focused on earnings on Thursday. German submarines-to-elevator giant Thyssenkrupp posted a net-loss of 94 million Euros ($105.37 million) for the quarter and posted a fourth quarter warning.

Sportswear giant Adidas posted a second-quarter net-profit of 531 million Euros and backed is 2019 guidance, but reported disappointing second-quarter sales.

Deutsche Telekom reported an increase of 7.1% for core profits, in line with expectations.

At 12:48 GMT, the U.K.’s FTSE 100 is trading 7223.62, up 24.92, or +0.35%. Germany’s Dax is at 11745.77, up 95.62 or +0.82% and France’s CAC is at 5334.30, up 67.79 or +1.29%.

Asian Markets

The major Asian stock indexes were higher on Thursday, following the lead set by Wall Street on Wednesday. The trade remained cautious, however, with investors keeping an eye on the Chinese Yuan. In the meantime, the indexes remained underpinned by the strong Chinese trade data. A rise in global bond yields also helped calm concerns over a global economic slowdown.

In Japan, the Nikkei 225 Index traded 20593.35, up 76.79 or +0.37%. Hong Kong’s Hang Seng Index traded 26120.77, up 123.74 or +0.48% and South Korea’s KOSPI settled at 1920.61, up 10.90 or +0.57%.

China’s Shanghai Index closed at 2794.55, up 25.87 or +0.93% and Australia’s S&P/ASX 200 finished at 6568.10, up 48.60 or +0.75%.

U.S. Outlook

The major U.S. stock indexes are expected to open the cash market higher, based on the pre-market futures trade. Investors are shifting toward “risk-on” sentiment because of a stable yuan and firming U.S. Treasury yields. These two markets will influence prices all session.

This article was originally posted on FX Empire

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