Wall St. expected to open higher on new Chinese stimulus
The New York Stock Exchange is expected to open higher this morning after the Chinese government announced a further interest rate cut for the world’s number 2 economy. The rate cut was followed by data showing another month of weaker factory output in China however a PMI index from HSBC showed better results for the sector. Asia’s major markets have closed higher. The positive tone has spread to Europe so far Monday with most major indexes showing gains, boosted by China but also on unemployment data for the Eurozone which showed a fall in jobless numbers.
US stock futures are trending higher. Oil is edging lower (Brent $61.98, WTI $49.21 at 5.45am ET). Gold is slightly higher.
Personal Income and Outlays at 8.30am ET
PMI Manufacturing Index at 9.45am ET
ISM Manufacturing Index at 10.00am ET
Construction Spending at 10.00am ET
Caesars Entertainment, Burger King Worldwide and Sotheby’s are among the companies reporting results today.
Fed committee may be less ‘patient’ on interest rates
It seems that many members of the Fed are moving towards an earlier date for increasing interest rates. Reuters reports that 7 of the 17 current members want the option of a June increase while only 4 say that economic conditions won’t be right until later in the year or into next. Only ten of the members are eligible to vote but all have a say on monetary policy. The stronger labor market is driving the talks of an earlier increase.
NXP to buy Freescale for $40 billion
NXP Semiconductors has announced that it is to acquire the smaller Freescale Semiconductor for over $40 billion. The chip manufacturing firms intend to merge to become their industry leader. Freescale’s shareholders will receive $6.25 in cash plus 0.3521 of an NXP share.
Profit margins will be squeezed as labor market improves
Analysts are warning that corporate profit margins will be squeezed as wage growth picks up pace across America. While profits have stalled in many companies the rise of wage bills will mean lower profits for shareholders. Wages have increased by an average of 2.2 per cent in the last year but with additional workers on the payroll the effect on businesses is 4.7 per cent. The latest data on wage growth will be released this Friday.