FinanceDraft

Stocks Drift & Earnings, Trade Talks Continue

Performance of stocks on Friday was lackluster after the best month enjoyed by global equities in the last seven years. Earnings started rolling in, and investors kept an eye on the resumed U.S. – China trade talks. The dollar remained steady.

European shares moved slightly higher as contracts on the S&P 500 were slightly changed. However, shares on the Nasdaq dipped a little as the trade talks between the world’s two greatest economies broke up after agreeing to continue talking. News that China will be increasing its purchases of American energy and agricultural goods failed to boost Asian shares, which were already heading for the fourth straight weekly advance. With the Federal Reserve’s pivot on its stand and the interest rates and monetary tightening on Wednesday, treasuries have retained most of their gains.

Traders are getting ready for the monthly American labor report to come out on Friday amid the ongoing earning seasons that has sent out mixed signals to investors. Technology shares have gone up in the U.S. on Thursday due to solid corporate reports. However, a lower than expected sales forecast from Amazon.com Inc has dimmed optimism. In other trade talk news, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will be heading to China in mid-February.

According to Homin Lee, a macro strategist at Lombard Odier, the outlook remains positive with hopes that the market will go up further. This also depends on no further hiccups in what the Federal Reserve has mentioned this week.  The pound weakened as data poured in that U.K. manufacturing fell to a 3 month low in January. Oil prices remain below $54 a barrel as concerns about its demand grew.

The coming week will witness central banks reviewing their monetary policy, including the Bank of England, in Brazil, Australia, Mexico, Serbia, Russia, Philippines, India, and Thailand. Earning seasons will continue with releases from Toyota, Alphabet, BP, and Disney. Chinese financial market will be closed for the Lunar New Year holiday next week.

The Stoxx Europe 600 Index went up 0.1 percent and futures on the S&P 500 Index slipped less than 0.05 percent. The FTSE 100 Index went up 0.7 percent. The DAX Index increased less than 0.05 percent. The MSCI Emerging Market Index went up less than 0.05 percent. The MSCI Asia Pacific Index went down slightly by 0.1 percent. The Bloomberg Dollar Spot Index went down by less than 0.05 percent. The euro went up by 0.2 percent to $1.1467.

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