Tuesday January 15th

15-01-2019

Dow futures turn negative after JP Morgan shares fall on profit miss

U.S. stock index futures pared most of their gains Tuesday following the release of weaker-than-expected earnings from banking titan J.P. Morgan Chase. Dow Jones Industrial Average and S&P 500 futures erased their gains and pointed to a slight decline, while Nasdaq 100 futures indicated a small rise at the open. J.P. Morgan Chase shares fell 2.1 percent in the premarket after the company reported weaker-than-expected profit for the fourth quarter. The bank’s results come a day after Citigroup posted fourth-quarter profit that beat analyst expectations. Still, its fixed-income revenue fell 21 percent from the previous year as trading conditions deteriorated. Stock futures initially pointed to solid gains at the open as positive headlines around China alleviated fears of an impending slowdown in the world’s second-largest economy. China’s National Development and Reform Commission (NDRC) said on Tuesday it would aim to achieve “a good start” for the economy in the first quarter, lifting hopes of further economic stimulus. Separately, Chinese Premier Li Keqiang said that the government was seeking to establish conditions to help meet its economic goals for 2019, Reuters reported, citing Chinese state television. Wall Street appeared to track the upbeat sentiment in Europe and Asia. Indexes in both continents were mostly higher on the back of hopes that China would introduce more measures to support its weakening economy. Figures released earlier this week showed that Chinese exports and imports fell sharply in December, while the country’s trade surplus with the U.S. reached a record high. The data put pressure on global equities, which broke off from last week’s rally on Monday. Equities stateside kicked off 2019 with strong gains, rebounding from a sell-off last month that briefly pushed the S&P 500 index into bear market territory. Also weighing on investors is the partial government shutdown, which has entered its 25th day and is the longest shutdown on record. The Democratic Party is at odds with the Donald Trump administration over the president’s proposed $5 billion U.S.-Mexico border wall. Traders will also pay considerable attention to political developments in the U.K. British lawmakers are gearing up for a key vote on Prime Minister Theresa May’s Brexit deal Tuesday evening. Investors widely expect a defeat for the government, but are looking out for the margin of defeat to gauge how negative an impact it could have on the U.K.’s plan to withdraw from the European Union or May’s leadership. Sterling fell 0.1 percent versus the dollar in early morning trade, to $1.2851. U.S. producer prices fell more than expected in December, weighed by down by a plunge in the cost of energy products, pointing to moderate inflation pressures at the factory gate. The Labor Department said on Tuesday its producer price index for final demand dropped 0.2 percent last month after edging up 0.1 percent in November. That left the annual increase in the PPI at 2.5 percent in December. Economists polled by Reuters had forecast the PPI slipping 0.1 percent in December and gaining 2.5 percent on a year-on-year basis. Asia Pacific markets mostly traded higher Tuesday despite lingering concerns over an economic slowdown in China, which dampened sentiment at the start of the week after China released trade data. South Korea’s Kospi added 32.66 points, or 1.58 percent, to 2,097.18 while the Kosdaq gained 7.30 points, or 1.07 percent, to 690.39. In Japan, the benchmark Nikkei 225 added 195.59 points, or 0.96 percent, to 20,555.29 after resuming trade on Tuesday — the Japanese market was closed Monday for a public holiday. Greater China markets gained: Hong Kong’s Hang Seng index rose 1.82 percent in late-afternoon trade, while mainland Chinese markets rose as the Shanghai composite added 34.58 points, or 1.36 percent, to 2,570.34. Major indexes in Singapore and India also rose. Oil prices rose more than 1 percent on Tuesday after tumbling the previous session, although a darkening economic outlook may soon weigh on growth in fuel demand. Brent crude oil was up 77 cents, or 1.3 percent, at $59.76 per barrel by 8:53 a.m. ET (1353 GMT), after briefly climbing above $60. The benchmark crude had fallen more than 2 percent on Monday. U.S. West Texas Intermediate was up 75 cents, or 1.5 percent, at $51.26. Gold eased on Tuesday as the dollar benefited from weak German economic data that pressured the euro, but the metal held near recent six-month highs as investors awaited a parliamentary vote on Britain’s plan to exit the European Union. Spot gold rose 0.01 percent at $1,291.85 per ounce at 8:55 a.m. EST, while U.S. gold futures rose 0.04 percent to $1,291.80.