Mixed night's trade on US earnings; focus now turns to European PMI and ECB

A mixed day’s trade in global markets

Wall Street equity indices traded slightly higher, as traders wrestle with improving market sentiment, but fundamentals that inspire little excitement. Brexit remains of high concern, and though few developments materialized last night, the market is maintaining confidence a deal will be coming. The ASX 200 is expected to open higher this morning, despite what’s proven a soft overnight lead. Oil prices climbed following a bigger than expected drawdown in US Crude Inventories data. And all eye’s turn to Europe in the next 24 hours: the European Central Bank meets, and a spate of PMI data from the continent is released.

US stocks hindered by mixed earnings

The S&P 500 can’t seem to smash through the 3000 level with any gusto. The benchmark waivered at that psychological barrier during North American trade. But again, impetus for a meaningful push higher for US equities was lacking. Earnings season, of course, if rolling on, and yesterday’s batch of reports delivered the kind of dourness foreseen by analysts leading into this reporting period. Caterpillar Inc greatly missed estimates; as did Texas Instruments – a chipmaking firm, an industry that’s been caught in the middle of the US-China trade-war. The performance of US stocks hinges on some major tech firms now. Microsoft beat estimates this morning, with Amazon the next to watch.

Brexit goes quiet as plotting begins

Brexit news was relatively quiet last night, though one can almost hear the gears of UK PM Boris Johnson’s politicking from this side of the planet, as he tries to concoct a way to get his Brexit-deal over the line. A general election in the UK to try and settle the gridlock appears the likeliest next step in Brexit, though there were headlines last night that the PM was in talks with Labour Opposition Leader Jeremy Corbyn on an acceptable Brexit-timeline last night. The Pound traded relatively stable, suggesting an orderly Brexit is still the markets assumed outcome. It’s trading in the 1.29 handle this morning.

Oil prices climb on bigger US crude drawdown

The FTSE 100 rallied by 0.7%, too. However, this was not Brexit related, at least predominantly. The slightly weaker Pound, as always, supported UK stocks. But the real catalyst for the FTSE during European trade was a rally in energy stocks, catalysed, naturally, by a lift in oil prices last night, after US crude oil inventory data showed a bigger than expected drawdown last month. The news provided a minor reprieve to oil bulls, who’d already benefited from a lift in oil prices earlier in the week, following pledges from OPEC of deeper production cuts, to offset effects of softening global growth.

ASX to open higher this morning

Oil’s rally will probably set up the energy sector and some firms in the material space for a higher open this morning. Even in light of what was no more than a lukewarm night’s trade for the risk-assets, the ASX 200 is expected to open roughly 30 points higher this morning. This comes off the back of a day that proved flat-as-a-tack the ASX yesterday. Having traded in the red all day, the ASX200 managed to grind higher in late trade to close the day unchanged. A meaningful push higher still needs an impetus, with investors keeping an eye on overseas news, in light of a light calendar domestically.

European PMI data puts global growth back in focus

Conceivably, that could come tonight, for the ASX and broader global financial markets, from the release of European PMI data. There’s been a dearth of forward-looking data released since the last US-China trade breakthrough for markets, with tonight’s PMI figures a well overdue check-up on the global economy’s health, especially in the context of potential improvements in global trade conditions. Continent wide, along with individual country, PMI numbers are forecast to pick-up this month. However, they’ll almost undoubtedly show a sector still in decline in Europe, portending a high chance of recession in Europe in the coming quarters.

Goodbye to Mr. “Whatever-it-takes”

It’ll preface well tonight’s marquee event: the meeting of the European Central Bank. Tonight, is Mario Draghi’s swansong meeting, handing over the reins of the ECB to incoming President Christine Lagarde. No policy change is expected by market participants from the ECB tonight. But with the monumental change in power coming at the central bank, the forward guidance will be crucial. There’s reportedly a high degree of division and discontent amongst the ECB currently, and that’s leading some to believe that the days of Draghi’s-dovishness are through. Investors will be hoping for a seamless transition, that paves the way for a continuation of Draghi’s cheap-money legacy.