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Asia Falls On US Data, Trade Talks Remain In Focus, US Futures Rise In Early Trade

Thomas Hughes
Trade optimism and better than expected US data help lift stock in early trading, reversing losses in the Thursday session.

Weak US Data From US Sends Asian Stocks Ducking For Cover

Asian equity indices took a dive in Friday trading following a round of weak data from the US. December US Retail Sales made their biggest one month decline, down -1.2%, and renewed fears of a slowing global economy. The data, while shocking, was largely shrugged off by US markets in favor of trade optimism.

On the trade front, US/China trade talks have concluded for the week with no major headlines to speak of. US Secretary of State Steve Mnuchin says progress has been made but no details were given other than that another round of talks have been scheduled for next week in Washington.

The Hong Kong Heng Seng led the decline with a loss of -1.87% and posting most of the loss in the final hour of trading. The Shanghai Composite shed -1.37% followed by a -1.34% decline in the Korean Kospi. The Japanese Nikkei fell -1.13% while the Australian ASX bucked the trend to post a small gain. Tech led the decline as it is the most vulnerable to trade woe with shares of Samsung and SK Hynix moving lower -3.0% and -4.66% respectively.

European Indices Move Higher On Hope

European indices were buoyed by trade hope after it was revealed another round of trade talks has already been slated for next week. The news is far from concrete but is taken as a sign the negotiation is progressing in a satisfactory manner, perhaps satisfactory enough to allow US President Trump to postpone the implementation of the March 2nd tariff deadline.

The French CAC was in the lead in midmorning trading, up nearly 1.60%, with the German DAX and UK FTSE trailing at 1.22% and 0.58% respectively. In stock news, Germany’s Scout24 surged to the top of the listings after a consortium of private equity firms including Blackstone offered to buy the online classified ads business for $6.4 billion. France’s Eutelstat was among the days worst performers posting a loss near -6.0% after reporting weaker than expected earnings.

US Futures Point To Positive Open

US futures were pointing to a positive open on Friday. The major indices were looking at gains near 0.25% after posting similar losses in the previous session. The move is supported by trade optimism and some better than expected data including a more-current read on Retail Sales.

The January read on retail sales was a bit weaker than expected but nothing like the miss posted for December. The headline and core were both flat at 0.0% versus an expectation for 0.1% and 0.2%. Manufacturing data, the Empire State Manufacturing Survey, was better than expected at 8.8 and suggests the US economy is still in decent shape.

Today’s action is likely to be affected by options expiration. Today is expiration day for US equity options which may induce volatility as traders take profits and settle contracts.

This article was originally posted on FX Empire