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Global Stocks Pause on Mixed Economic Data

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05/15/2019 | 07:41am EDT

By Paul J. Davies

U.S. stocks were priced to open lower in futures markets on Wednesday following European indexes down despite the strong close Tuesday when President Trump suggested a U.S.-China trade deal could still be in the cards.

The S&P 500 and the Dow Jones Industrial Average were both set to open about 0.3% lower, after the Stoxx Europe 600 slipped 0.4% in morning trade and the FTSE 100 slid 0.1%.

Germany's DAX was also down 0.1%, despite data showing the country's economy rebounded in the first quarter, when it expanded 0.4%.

The European stumble followed a much stronger performance in Asian stocks despite even Chinese economic data that showed industrial production, retail sales and fixed-asset investment all slowed in April.

Shares in Shanghai were nearly 2% higher, Hong Kong's Hang Seng Index was up 1% and Japan's Nikkei gained 0.6%.

In the U.S. futures pointed to a fractionally lower open on Wall Street, with the S&P 500 and the Dow Jones Industrial Average both down less than 0.1%.

Sebastien Galy, senior macro strategist at Nordea Investment, said investors in China seemed to react to the weak economic data by assuming that the government would bring more economic stimulus measures, sending stocks higher. The buying, he thought, was driven mainly by those who had been underinvested in the early part of the year.

"What seems to be happening is that many had missed the rally since December and were waiting to buy on a dip," he said. "With such a psychology, a shock that should be sizable seems to fade faster."

In Germany, the first-quarter growth was mainly domestically driven, with stronger private consumption and construction at home. Carsten Brzeski, ING's chief economist in Germany, said the data confirmed his view that not all is bad in the economy there, although investors shouldn't get overexcited as industry was still struggling and the country would face more headwinds this year.

"Today's German GDP data are in our view not necessarily the 'return of the living dead' as we still see the growth potential of the German economy, particularly if investments finally pick up," Mr. Bzreski said. "Instead, strong German data are rather another illustration that the condemned (often) live longer."

The WSJ Dollar Index, which measures the dollar against a basket of currencies, was flat.

The yield on 10-year U.S. Treasurys dipped to 2.381%, from 2.421% on Tuesday. German 10-year bund yields dropped to their lowest level since the end of September 2016, hitting -0.110%, from -0.074% on Tuesday.

In commodities, oil was unruffled by apparent security fears in the Middle East that led the U.S. State Department to tell all nonemergency staff to leave Iraq. Brent crude oil, the global benchmark, was down 0.4% at $70.93 a barrel.

The WSJ Dollar Index, which measures the dollar against a basket of currencies, was up 0.04%. Gold was up 0.2% at $1,298.90 an ounce.

Write to Paul J. Davies at paul.davies@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
DAX 0.55% 12457.7 Delayed Quote.17.98%
DJ INDUSTRIAL -0.19% 27094.79 Delayed Quote.16.37%
FTSE 100 INDEX 0.28% 7234.11 End-of-day quote.0.00%
HANG SENG -0.96% 26488.45 Real-time Quote.2.49%
NASDAQ 100 0.17% 7901.792115 Delayed Quote.24.63%
NASDAQ COMP. 0.07% 8182.879231 Delayed Quote.23.37%
NIKKEI 225 0.38% 22044.45 Real-time Quote.9.93%
S&P 500 0.00% 3006.79 Delayed Quote.19.94%
US DOLLAR INDEX -0.20% 98.36 End-of-day quote.1.73%
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