Earnings Recession Ahead in the US
Yesterday major US corporations such as Goldman Sachs reported their earnings which saw a big decline in both profits and turnover. The key takeaway is that the coming quarter is not expected to be a positive one, something which would in turn put US companies into an earnings recession.
US Stock markets closed slightly lower yesterday, as corporate earnings continued to set the pace. The Dow Jones industrials lost 0.1% weighed down by Goldman Sachs (GS) while other major indices also closed in the red. Meanwhile, stocks in Asia were mostly higher this morning, as U.S.-Japan trade talks kicked off and the Bank of Japan chief flagged risks of increasing trade protectionism. Elsewhere, the RBA reiterated its dovish stance in its minutes earlier today which caused the AUD to dip.
Markets to Focus on China Data
The world will focus on tomorrow's data out of China, and specifically its GDP to see how the economic development of the world’s second largest economy is playing out. China's annual gross domestic product (GDP) is expected to decline to 6.3% in the first quarter of 2019 from 6.4% in the final three months of 2018. On the quarter it is projected to slide to 1.4% from 1.5%.
Forex Preview
The greenback is mostly trading flat today with the DXY close to the 97 level. Meanwhile the AUD/USD remains pressured by the recent RBA dovish minutes. AUD/USD was last seen trading 0.4% lower at 0.7147 as of 9:10 GMT this morning. The sterling is hardly moving like most major currencies this morning while the EUR/USD is stuck at the 1.13 waiting for new impulses. Maybe today's ZEW can get something moving, the same can be said about Thursday’s PMIs.
Oil and Gold Continue to Dip
Oil prices fell for a second consecutive day on the possibility the U.S. and Russia—two of the world’s top oil producers—will increase output and push recently global supplies higher. Meanwhile, gold prices also plummeted for a fourth straight session on Tuesday amid hopes that Washington and Beijing are making headway in their trade talks.
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