Global stocks are mixed on Tuesday, with weakness in Asia offset by modest optimism in Europe and the US following signals of a near-term Fed rate cut. European stocks edge higher as a softer Euro and record low bond yields suggest easing of monetary policy by the ECB, which has a meeting on Thursday in Vilnius.
Globally, stocks continue to trade amid the swirling uncertainty of US-lead trade disputes with China, Japan, Mexico, and the European Union, all of which have triggered pronounced slowdowns in manufacturing and investment growth and raised concerns of a worldwide recession.
Last night, Reserve Bank of Australia lowered key interest rate by a quarter percentage point to a record low of 1.25% in response to weak inflation and economic growth. This is the first loosening of monetary policy of the central bank since mid-2016.
Meanwhile, the St Louis Fed President James Bullard said a “darkened” global trade narrative could lead to monetary easing. The investors now wait for the mid-morning speech from Chairman Jerome Powell in Chicago. The CME Group futures prices continue to suggest at least a 50/50 chance of a July rate cut, with two more easing moves priced in between now and the end of the year.
Asian markets recap
Chinese stock markets declined on Tuesday, while other major indexes in the Asia-Pacific region remain unchanged on the background of continuing tensions in world trade.
In China, the mainland index Shanghai Composite dropped by 0.96% to 2,862.28 points, while the Shenzhen Composite fell by 1.43% and ended the session at 1,494.15 points. In Hong Kong, the index Hang Seng wiped out 0.7% of its value after the negative performance in the last hours of trading, with the Chinese tech giant Tencent declining by 1.92%.
Japanese blue-chip benchmark Nikkei 225 declined to a minimum of 0.01% to a level of 20,408.54 points. The shares of Softbank Group were down by 3.27%. The smaller index Topix remained almost unchanged at the end of the stock market at 1,499.09 points.
In South Korea, the local Kospi recorded a minimal decline of 0.04% to a level of 2,066.97 points.
In Australia, the S&P ASX 200 rose by 0.19% and ended the session at 6,322.40 points after the Australian Central Bank announced it was lowering its benchmark interest rate by 25 basis points to 1.25%. According to the governor of the Reserve Bank of Australia, Philip Lowe, today’s decision to cut the interest rate will help to use spare capacity in the economy, reduce unemployment and ensure safer progress towards the goal of inflation.
European markets mid-session recap
German index DAX 30 is up by 103 points, or 0.87%, to 11,895.84 points at 10:00 GMT. The stocks of carmakers Volkswagen and Daimler are up by 2% and 2.3%, respectively, while the chemical giant BASF jumped by 3.5%. Financial companies are up with Deutsche Bank and Commerzbank rising by 1.8% and 2.0%, respectively.
French index CAC 40 is trading with a minimum increase of 0.13% to 5,248.10 points. The stocks of carmakers are sharply on the rise, with Renault and Peugeot adding by 3.1% and 1.3%, respectively.
British index FTSE 100 added 0.22% to 7,200.43 points at mid-session trading. Among the biggest losers were healthcare and oil stocks, as worries about trade and economic growth continued to dominate markets, while money manager Hargreaves Lansdown was hit by the suspension of one of the Woodford investment funds.
Wall Street pre-session recap
Wall Street stock index futures rallied Tuesday morning, following a volatile session on Wall Street. Investors were hopeful that lawmakers may step in and block the Trump administration’s plan to impose tariffs on Mexico.
Around 6:15 a.m. ET, Dow futures indicated a positive open of more than 170 points. Futures on the S&P and Nasdaq were both seen higher, as well.
On the data front, factory orders for April will be expected at around 10 a.m. ET.