Yahoo Finance ‘Churn, Baby, Churn’, Stocks Finish Rangebound after Early Surge on Brexit News
The major U.S. stock indexes finished higher on Thursday, but the trading session can best be described as a “grinder” with the markets strengthening early in the session on Brexit and earnings news then battling to hang onto those early gains the rest of the day on increased doubt over the UK and EU announcement. The majors are all in a position to post a weekly gain, but that’s even deceiving with most of those gains attributed to Tuesday’s strong performance.
In the cash market, the benchmark S&P 500 Index settled at 2997.95, up 8.26 or +0.28%. The blue chip Dow Jones Industrial Average finished at 27025.88, up 23.90 or +0.09% and the tech-based NASDAQ Composite Index closed at 8156.85, up 32.67 or +0.42%.
Pre-Opening Brexit News Leads to Turnaround
U.S. futures markets were lower shortly before the cash market opening, but suddenly rose after U.K. Prime Minister Boris Johnson said “we have a great new Brexit deal” via Twitter. He then called on British lawmakers to back the deal when it’s put before Parliament on Saturday. Meanwhile, European Commission President Jean-Claude Juncker tweeted that the deal was a “fair and balanced” one.
Buyers Slam on Brakes as Deal Remains in Doubt
However, the trading range tightened and volume dropped shortly thereafter as investor’s reacted to the lingering uncertainty tied to the news. Once again, some of the headlines were deceiving. This was not a done deal. The U.K. Parliament has yet to approve the deal before it can be implemented, and this is a problem for investors.
“At the moment, the parliamentary arithmetic is somewhere between “extremely tight” and ‘no’” said Constantine Fraser, a political analyst at TS Lombard. But the “main takeaway is that the Conservative party is now committed to this deal, not no-deal, and will campaign for a majority for it.”
After the new deal was announced, the U.K. opposition Labour party said in a statement that “from what we know, it seems the Prime Minister has negotiated an even worse deal than Theresa May’s, which was overwhelmingly rejected.”
The pro-Remain Liberal Democrats also said they were determined to stop Brexit altogether and still advocated a second referendum.
The leader of the Brexit Party, Nigel Farage, said the deal should not be supported.
The Scottish National Party (SNP) has also said it will not vote for the deal.
A key ally of the government, the Northern Irish Democrat Unionist Party (DUP), has already responded by saying that it cannot support the deal. The U.K. government, which does not have a majority in the British Parliament, needs the DUP’s votes to approve the deal.
Finally, Johnson faced a Saturday deadline by law to request an extension to the current Brexit departure date of October 31 had no deal been reached. However, Juncker has implied that EU leaders won’t allow an extension, even if Johnson asks.
Other News
Netflix shares rose 2.5% after the video streamer posted earnings that topped analyst expectations. Morgan Stanley shares jumped 1.0% after reporting stronger-than-anticipated trading and advisory revenues.
Overall, the corporate earnings season is off to a solid start. More than 78% of the S&P 500 companies that have reported have topped analyst earnings expectations, according to FactSet.
China also said on Thursday that the U.S. must remove tariffs in order for the two countries to reach a final agreement on trade. This was another reason behind the limited buying during the session.
This article was originally posted on FX Empire
