Wall St to open lower on Chinese data; Citi kick off earnings season for banks

Summary:

• Chinese trade data pushes indices lower

• Government shutdown breaks record

• Citigroup the 1st big bank to report; beat on earnings but miss on revenue

Stock markets have made a negative start to the week in Asia and Europe after the latest trade data from China pointed to an alarming slowdown. This has soured risk sentiment somewhat and US indices are trading in the red ahead of the opening bell. Last week was another good one for investors with the US500 extending the recovery which began on Boxing day but the market still has failed to break above the key resistance zone below 2624. On shorter time frames there is some suggestion that the rally has run out of steam and possibly turned lower with the market moving below the Ichimoku cloud on H1.

The US500 has moved below the Ichimoku cloud on H1 and could be seen to suggest that the near-term trend has turned lower. The region below 2624 remains key resistance. Source: xStation

While it is unlikely that it is having a major negative impact on the market, the longer the ongoing government shutdown continues the greater influence it will exert. The shutdown is now 24 days and counting, surpassing the previous record to now stand alone as the longest of all time. President Trump has taken to Twitter this afternoon to unsurprisingly blame the Democrats for the shutdown once more, but there is little to suggest this issue will be resolved anytime soon.

Before the opening bell Citigroup announced their latest trading update, the first of the big banks to report. Overall the release was a little disappointing with revenue falling to a 2-year low as a sharp drop in fixed-income sales and trading took a heavy toll. For the 4th quarter Citi reported revenues of $17.12B, below the $17.58B expected by analysts - and also just below the corresponding figure for 2017. However, a slight fall in expenses and a lower effective tax rate helped the bank to improve on earnings despite the fall in revenue. Earnings per share (EPS) came in at $1.61 on an underlying basis, excluding a one-off tax gain. This beat the street with analysts predicting EPS of $1.55. One factor to consider in the EPS figure is that it was boosted by a lower share count after the bank bought back more than 200m shares last year. On the whole the update is a bit soft and shares are trading lower by around 1% in the pre-market.

Shares in Citigroup have enjoyed a strong bounce in recent weeks but the market remains in a downtrend and the stock is called to open lower this afternoon following the latest trading update. Source: xStation