Stocks edged higher Friday and were on course to close out a week of gains despite a backdrop of mixed economic data from major global economies. U.S. futures put the S&P 500 and Dow Jones Industrial Average on course for 0.4% gains at the open, with the Nasdaq-100 set to climb 0.5%. The S&P was set to close out the week 2.5% higher, extending its 2019 gains to 12.5%, despite snapping a three-day streak of gains Thursday.
Shares in Boeing were down 0.1% in premarket trading after it said Thursday it would pause deliveries of its 737 MAX jetliner. A U.S. Air Force official also raised concerns about one of the company’s biggest military-plane programs. Shares in the aircraft manufacturer have already plunged 15% this month, with investors spooked by two fatal 737 MAX crashes within five months.
Facebook shares were set to open 1.6% lower after two executives announced their departure from the company. Apple was set to advance 0.7%, extending Thursday’s gains that came after a Morgan Stanley analysts made an optimistic call on the stock.
Investors were continuing to monitor any remarks out of Washington and Beijing on trade negotiations, after President Trump’s comments that it may be several weeks before officials have a clearer picture of whether a trade agreement can be reached with China, as well as U.S. industrial production data due out later in the day.
With fourth-quarter earnings releases having slowed to a trickle, investors have refocused on mounting concerns around the health of global economic growth.
This week has seen a batch of mixed global data, with eurozone inflation data released Friday matching market expectations, coming after weaker-than-forecast U.S. inflation numbers Thursday. Similarly, Chinese credit and monetary supply figures undershot forecasts, while the country’s home price index growth fell to a 10-month low Friday.
Economic anxieties have tempered stock market gains fueled by increasingly cautious central banks, better-than-expected earnings and progress in trade talks between Washington and Beijing.
The mixed fortunes of major economies have left some investors uncertain of the way forward for equities in the coming months. In a new Wall Street Journal survey, economists sharply lowered their forecasts for growth in the first quarter of 2019.
“You look at the U.S. numbers coming out and you see consumers are out continuing to spend money and keep the economy going,” said JJ Kinahan, chief market strategist at TD Ameritrade. However, Europe and Asia present a gloomier picture, Mr. Kinahan said, “and when you have one important area of the world in slowdown mode, and add in Asia, it’s hard to get your arms around how well or poorly growth is doing. “
Still, with gloomier growth indicators having prompted a wave of dovish rhetoric from central banks and stimulus measures from the Chinese government, there are signs that the softness may be stabilizing.
This week’s data out of Europe “wasn’t as bad as markets expected and we are seeing a turn in some of the hard data out of China,” said Thushka Maharaj, global multiasset strategist at J.P. Morgan Asset Management.
China’s fiscal policy, he said, “has at least been supportive, so now we need to see how quickly that translates into data flow and whether it’s likely we’ll see that soon or whether we’ll have to wait until the second half of the year.” The Stoxx Europe 600 was up 0.3% in late morning trading, with autos stocks up 1.1%, driving gains as BMW shares picked up by the same amount after the German car maker posted earnings.
The British pound climbed 0.3% against the U.S. dollar, on course to close out the week 2% higher. The U.K.’s parliament has voted both to rule out leaving the European Union without a withdrawal deal and in favor of an extension to the current Brexit deadline of March 29.
With a no-deal Brexit remaining the current legal default, politicians were no closer to reaching a common position on what Prime Minister Theresa May ought to do with an extension period, should the EU grant one. The U.K.’s FTSE 100 was up 0.5%.
That followed upbeat trading in Asia, where Japan’s Nikkei 225 index climbed 0.8%, after the Bank of Japan surprised few investors by leaving interest rates unchanged while also maintaining purchases of Japanese government bonds. The yield on 10-year Japanese government bonds had last risen to -0.039% from -0.042% late Thursday.
China-exposed stocks also advanced, with Hong Kong’s Hang Seng benchmark up 0.6% after Chinese Premier Li Keqiang said in a speech that China’s government will consider cutting interest rates and banks’ reserve requirement ratio to counter new downward pressure on the economy.
Categories: Stock Markets