1. Wall Street’s Slide Continues
Wall Street sank into a puddle of red yesterday as all major indexes slid lower with the S&P 500 posting its biggest one-day decline in over a month, sparking fears of a topping market.
Global growth fears came back with a bang yesterday as the healthcare and energy sectors dragged the market lower for a third straight day. The loss of momentum was largely attributed to the upcoming earnings season conclusion as investors desperately seek out the next catalyst to drive markets.
However, with the trade deal optimism largely played out there seems to be a serious lack of any positive growth catalysts present in the markets to spur the next phase of the uptrend. The $2,800 level has proven to be a significant hurdle for the S&P 500, and may remain intact if markets cannot rediscover their momentum.
The healthcare sector fell 1.5% yesterday, led lower by Pfizer (-2.4%) and Amgen (-3%), while the energy sector lost 1.3% with General Electric and Exxon Mobil dipping 7.9% and 1.1% respectively.
In the absence of any new catalysts the markets will most likely consolidate sideways and slightly lower, until some promising economic data is published or a trade deal is struck. The shares with the fastest growth in 2019 are likely to be the first victims of profit-taking, so keep your wits about you!
2. ECB In Focus
All eyes will be set firmly on the European Central Bank (ECB) today as it delivers its second rates decision of 2019 amid a rather gloomy regional growth outlook. So, what’s on the cards for today?
Analysts are expecting the ECB to come out with more disappointing data and revised growth forecasts to add to the long lists of ailments for the region. That’s no surprise, but what they will be looking closely for is any indications of upcoming stimulus measures to prop up the the region.
Murmurs of stimulus in the form of cheap loans have been heard across the market, but today’s announcement will hopefully shed some light on whether the whispers can be trusted or not.
With the slowdown in industrial output and exports weighing on growth, loan stimulus is a good first step in offsetting the decline and holding off on lowering rates to achieve maximum impact when it is needed. The next move will be to place rate hikes on hold to ease a bit of pressure on the economy.
Equities will be the likely benefactor of any signs of softening today from the ECB while the Euro may weaken against its major pairs. Today’s announcement will undoubtedly affect Europe’s near-term growth prospects. So be sure to listen closely!
Today we are watching…
1. Costco (#costco)
Investors are expecting mostly good things from Costco ahead of its earnings announcement today. The company has been posting some stellar growth metrics, gaining market share and its stock has bumped up roughly 9% since the start of 2019. However, inflation and aggressive spending on its e-commerce capabilities may cause a slight drag on the company’s earnings, but overall the picture looks positive for Costco.
2. Kroger (#kr)
Amazon’s recent announcement that it plans to enter the grocery space has put a spanner in the works for the likes of Kroger, Target and Walmart. However, Kroger has been upping its game in the e-commerce and personalised meal kit market through a number of strategic joint ventures with the likes of Instacart, Home Chef and Alibaba to keep abreast of the competition. Analysts are unsure if Kroger will beat estimates today, and will focus more on the company’s guidance for 2019 as an indication of growth to come. Keep an eye on this one!