Shutdown optimism; Gucci shines in China; Nissan suffers

Posted at 3:29 AM, Feb 12, 2019
and last updated 2019-02-12 05:29:04-05

1. Shutdown optimism: US stock futures were sharply higher after Congressional negotiators said they had reached an agreement in principle to avert a partial government shutdown.

It’s still not clear what will happen next. Negotiators on Monday declined to get into details on the exact parameters of the potential breakthrough, and President Donald Trump has not yet weighed in.

Lawmakers are racing the clock in an effort to find common ground for an agreement on border security that will pass both chambers of Congress and be signed into law by Trump before Friday.

About 25% of funding for the US federal government runs out at the end of the week.

2. Gucci shines in China: Chinese shoppers might have lost their appetite for iPhones, but they are still buying luxury bags.

Kering, the owner of brands like Gucci and Yves Saint Laurent, reported bumper sales on Tuesday driven by strong growth in Asia. Its revenue increased 26% in 2018 to €13.6 billion ($15.4 billion).

Luxury companies LVMH, L’Oreal and Hermes have also defied expectations of weaker sales in China caused by a slowdown in the world’s second largest economy.

Concerns over luxury sales were sparked earlier this year when Apple warned that it was selling fewer iPhones in China.

Kering did have some words of warning for investors. The company said the business environment “remains unsettled” because of geopolitical risks, trade policies and fluctuations in exchange rates.

Shares in Kering dropped 3% in Paris after earnings were announced. Helen Brand, an analyst at UBS, said the stock has been trading higher ahead of the earnings in anticipation of strong results.

3. Job openings: The Bureau of Labor Statistics will release a report on US job openings in December. The data will shine a light on what happened to hiring as the partial US government shutdown began.

The US job market has been strong despite growing concerns about economic growth. The economy added 304,000 jobs in January, marking the 100th straight month of job gains.

4. Global market overview: European markets opened higher following a positive trading session in Asia.

The Dow Jones industrial average closed down 0.2% on Monday. The S&P 500 and the Nasdaq added 0.1%.

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5. Earnings and economics: Under Armour and Molson Coors Brewing will release earnings before the open.

Activision Blizzard, Denny’s, Groupon and TripAdvisor are up after the close.

Japanese carmaker Nissan lowered its forecast for the full fiscal year on Tuesday, blaming weak sales in North America and Europe.

The company also announced 9.2 billion yen ($83 million) in additional charges related to payments to Carlos Ghosn. The former Nissan chairman has been detained in Tokyo since November.

Nissan stock gained 1.9% in Tokyo on Tuesday. Its earnings were released after Japanese markets closed.

6. Coming this week:
Tuesday — JOLTS report on US job openings; Under Armour, Activision Blizzard, Molson Coors, Groupon report earnings
Wednesday — US and UK inflation data; Cisco, Hyatt, Yelp, Heineken, report earnings
Thursday — US holiday retail sales; Coca-Cola, CBS, Nvidia report earnings
Friday — Newell Brands and Pepsi report earnings