Futures are pointing towards a lower opening today with news of Eurozone industrial production and Chinese exports adding to the declines. These data points coincide with the start of a very busy week that will help shape investment decisions for the coming year.
The Brexit vote is on Tuesday, where UK parliament is going to have a vote on May's proposal for leaving the union. Should they reject the deal, there is little chance that another round could take place before the March deadline, increasing the chances of delaying or having a second vote to avoid a hard Brexit. Companies are adjusting to this new reality as seen in the numbers today. Capital goods such as machinery and white good like stoves and refrigerators were all down in the Ind. production numbers. Retail goods also saw a decline, emphasizing that everyone is holding back investments and purchases as the deadline approaches with no deal in place.
The decline in Chinese exports, specifically with the US, is also a reading of a larger picture concern. The trade wars between the US and China are still ongoing, with tariff increases on Chinese goods pushed to March. There is time for negotiations to take place now, but this extended time frame lowers the urgency. Earnings season in the US is kicking off this week which will show how much the trade wars affected companies last year and give some insight into what impact executives think it will affect overall 2019 earnings.
Overall this week will be important for the sentiments that develop out of the news. Data points are already showing a slowdown as a result of the political uncertainty of these events, so earnings warnings or a vote down of May's Brexit deal will be seen as continued weakness from uncertainty.