Top 5 Things to Know in the Market on Friday

Top 5 things to know on the market today on Friday 09-08-2019

1. U.S. PPI in focus as Chinese inflation shrinks for first time in 3-years

The Labor Department will release its July producer price index (PPI) at 8:30 AM ET (12:30 GMT) Friday, with traders keen to get a sense of whether the pace of inflation remains subdued.

Overnight, China’s own factory gate prices shrank for the first time in three years in July, adding pressure for Beijing to increase economic stimulus amid the ongoing trade war with Washington.

Indicators of growth showed a mixed read as the U.K. economy registered a contraction of 0.2% in the second quarter, its worst performance since 2012.

To the contrary, Japan’s gross domestic product registered much-stronger-than-expected growth in the second quarter, chalking up its best first half reading in two years.

Nevertheless, analysts warned that the data did little to boost optimism over the country’s exports in the face of trade tensions and a pending tax hike.

2. U.S. futures drop as reports show no progress on Huawei

U.S. futures pointed to a lower open as markets remained cautious in the face of the ongoing trade impasse between Washington and Beijing.

Bloomberg reported overnight that the U.S. is holding off on giving permissions to U.S. companies to use Huawei products.

The news is part of the ongoing trade battle between the two countries and comes after China put a halt to the importing of American agricultural products while the U.S. officially declared China a currency manipulator.

Providing some support in the tech sector, chipmaker Broadcom (NASDAQ:AVGO) announced that it will buy an enterprise security unit from Symantec (NASDAQ:SYMC) for $10.7 billion.

3. Uber disappoints as earnings season winds down

Shares in Uber (NYSE:UBER) sank around 8% in premarket trade after the company reported a $5.2 billion loss, missing consensus for quarterly earnings.

Although the company agreed with rival Lyft (NASDAQ:LYFT) that the price war in the U.S. was easing, growth in its core ride-hailing business slowed.

Earnings season was drawing to a close with 451 of the S&P 500 firms having already reported on Thursday.

73% of those firms have topped profit expectations on 4.2% growth while 59% have beat on sales growth of 5.4%, according to The Earnings Scout. 

These analysts calculated that the new blended growth estimate for the second quarter is 3.3%, confirming that there is no earnings recession.

4. European election issues weigh on sentiment

Italian stocks led declines in Europe after the country’s Deputy Prime Minister Matteo Salvini called for new elections that would put an end to his League party’s coalition with Five Star Movement.

Italian banks sank falling to their lowest level in more than a year, while the yield on the Italian 10-year bond jumped above 1.8% pushing its spread with the safe-haven German bund up to more than 200 basis points.

Election fears were also high in the U.K. as the country continues to struggle to reach an agreement over its departure from the European Union set for Oct. 31.

Analysts said that the contraction in the second quarter set the stage for a recession when third-quarter data is released in November which in turn could lead to snap elections. 

Reports had already surfaced Thursday that Prime Minister Boris Johnson was potentially planning a general election in early November, days after the country’s scheduled Brexit.

5. Oil holds higher despite gloomy IEA report on demand

Oil traded higher, supported by continued speculation that Saudi Arabia will work with other suppliers to further reduce supply in the face of price declines, despite a somber outlook from the International Energy Agency’s monthly report.

The IEA once again cut its demand forecast based on weaker prospects for the global economy.

The agency indicated that demand so far in 2019 has grown at its slowest pace since 2008.


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