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Trading Subdued Ahead Of PMIs, Mueller Report Release

Published 18/04/2019, 08:43
Updated 25/04/2018, 09:10

The Dow and the S&P slipped lower overnight. Trouble in the healthcare sector overshadowed strong quarterly earnings and upbeat data from US and China. The healthcare sector extended Wednesday’s 2% losses with a further 2.9% decline amid growing concerns of regulatory pressure on pricing. Political uncertainty is now starting to hang over healthcare stocks leaving investors wanting out.

The selloff in healthcare stocks overshadowed strong earnings for corporate America. Morgan Stanley’s share price increased 2.6% after posting stronger than forecast earnings. PepsiCo (NASDAQ:PEP) also surprised to the upside, lifting shares 3.8%. So far, of all the S&P 500 companies that have reported this earnings season, 84.6% have topped analysts’ expectations.

Moving into this earnings season, markets were expecting a tough quarter. So far, we are just not seeing the significantly lower figures that the markets have been expecting. That’s not to say there haven’t been some losers, such as IBM (NYSE:IBM) down 5.5% after revenue fell for a third straight quarter and Netflix (NASDAQ:NFLX) which closed 1.6% lower after subscriber guidance numbers fell.

Asian markets were subdued overnight as investors digested a softer close on Wall Street whilst looking ahead to a raft of pmi data from the eurozone and the US. Trading volumes are notably low moving towards the extended weekend break for Easter.

Global economy stabilising?

On the last trading day of the week, Investors will turn their attention to pmi data releases from Europe this morning, for further cues over the health of the eurozone economy. It’s going to be interesting because there is a feeling in the markets that the global economy is just starting to stabilise. Traders will pay particular attention to Germany’s manufacturing sector, which suffered a sharp contraction across recent months.

Investors are slowly starting to believe that the second quarter could be an improvement on the first, economically. However, more economic data is needed to confirm these suspicions. Today’s eurozone and US pmi data could go a long way to confirming or disproving such beliefs.

Safe havens out of favour before Mueller Report

Today the US Attorney General William Barr is due to hold a news conference on the release of Special Council Robert Mueller’s report on Russian interference in 2016 presidential election.

The fact that gold continue to hover around year to date lows and the Japanese yen around four month lows tells us that investors aren’t that worried about where we are right now or the Mueller report. Still it is worth keeping an eye on the event for an unexpected surprise which could boost the markets into life.

Opening calls

FTSE to open 11 points lower at 7460

DAX to open 13 points lower at 12140

CAC to open 10 point lower at 5553

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