The Wednesday Market Minute
- Global stocks mixed, with Asia higher and Europe modestly lower, after stronger-than-expected China GDP data.
- China’s first quarter growth rate speeds to 6.4% as government stimulus kicks in and industrial output rising at the fastest pace in 4.5 years.
- Oil prices gain on China recovery bets, with traders adding to long positions on supply concerns linked to Libyan conflict and ongoing sanctions on the sale of Venezuelan crude.
- U.S. stocks set to open modestly higher ahead of earnings from Morgan Stanley, PepsiCo and Abbott Labs.
Global stocks edged higher Wednesday, with sentiment boosted by stronger-than-expected first quarter growth data from China, as trade talks with the United States inch closer towards a deal between the world’s two biggest economies.
China’s economy grew at a 6.4% clip over the first three months of the year, according to official figures published Wednesday, a pace that topped analysts’ forecasts and suggested the government’s move to cut taxes and boost investment has arrested some of the decline seen over the final months of last year, when the economy grew at its slowest pace in nearly three decades.
“Investments in 1Q19 will mainly be supported by fiscal stimulus projects, including metro lines, toll roads and water management systems,” said ING economist Iris Pang. “But bear in mind that these are not market-driven investments instead, they’re government efforts to cushion the economy from heading south too fast.”
China’s Shanghai Composite hit a 13-month high after gaining 0.3% on the session while Japan’s Nikkei added 0.25% to close at 22,277.97 points.
Still, with the U.S. opening trade talks with Japan, citing a “very large” trade deficit with the world’s third largest economy, and questions over the fate of last summer’s tariff truce with Europe continuing to linger, the stronger China data may not suggest a sustainable turnaround in both world trade and global economic growth, particularly given the uncertainty that surrounds the slow-moving talks between Washington and Beijing.
U.S. equity futures, however, do suggest modest opening bell gains that would take the S&P 500 within just 18 points of the all-time high it reached on September 20, with contracts tied to the benchmark indicating a 5.4 point bump while those linked to the Dow Jones Industrial Average suggest a 20 point gain at the start of trading.
Qualcomm (QCOM – Get Report) shares were on the move again in pre-market trading, rising another 5% to suggest an opening bell price of $74.00 after gaining the most in nearly 20 years yesterday after the chipmaker settled an long and complicated patent dispute with Apple Inc. (AAPL – Get Report) .
Netflix (NFLX – Get Report) shares were also on the move, falling more than 1% to $355.55 each after the streaming entertainment service said second quarter subscriber additions would come in lighter-than-expected after figures for the first three months of the year topped analysts’ forecasts.
T-Mobile US (TMUS – Get Report) shares slipped 4.2% to $71.00 each in pre-market trading amid reports that the U.S. Department of Justice has raised concerns for the its $26 billion merger with Sprint Corp. (S – Get Report) , which would reduce the number of U.S. wireless carriers from four to three. Sprint shares are expected to open 5.16% lower at $6.01 each.
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Global oil prices got a lift from the stronger China data, as well as a weaker U.S. dollar, with broader market support coming from supply concerns linked to the ongoing military conflict in Libya, which threatens to disrupt supply from the country’s crucial oil industry, which produces around 1.1 million barrels each day.
Brent crude contracts for June delivery, the global benchmark for oil prices, were marked 40 cents higher from their Tuesday close in New York and changing hands at $72.12 per barrel while WTI contracts for May delivery were seen 38 cents higher at $64.43 per barrel.