News / Analysis
Finance Update – The Cupcake CaperFebruary 4, 2020
As if unruly protesters weren’t enough, this morning Hong Kong recorded its first Coronavirus death.
The news hasn’t hampered indexes across the continent, the Shenzhen Composite adding 3.16%, the Nikkei, 0.41% and the Hang Seng just over a percent. The reason for the surge – a 400 billion Yuan injection by the Chinese government through reverse repos.
The yen is down as Japan’s 10-year bond auction saw a 0.05% drop in yield. And, the Australian Dollar added a half percent after the RBA decided early this morning to maintain its 0.75% interest rate.
Traders will be watching New Zealand employment data for NZD guidance.
European markets gained a half percent on average as manufacturing PMIs yesterday surprised to the upside across the board.
The pound this morning arrested its drop, adding 0.15% overnight. In Northern Ireland, power-sharing, pro-unity Sinn Fein has climbed to 25% ahead of elections this week.
The Euro continues trending sideways, as the EU and the UK clash over a possible post-Brexit trade agreement.
While the EU demands that Britain adopt EU standards, UK PM Johnson says that if the bloc isn’t willing to provide a Canada-style free trade zone, like Australia – he will suffice with a World Trade Organization governed “no-deal”.
US markets seem to have recovered nicely from their Corona-induced plunge. The USD lost some clout, despite manufacturing data that came in generally positive.
While the Institute for Supply Management (ISM) puts the PMI at 50.9% – up from January’s 47.8%, Markit’s IHS (Information Handling Services) indicates a half-point drop to 51.9.
Construction spending in December also declined by 0.2%. This afternoon’s factory orders are expected to increase by a percent, following November’s 0.7% reduction.
Meanwhile, the Commerce Department has decided to impose anti-subsidy tariffs on imports from currency-manipulating countries, such as Switzerland, Germany, Japan, China, and others.
Oil overnight gained a percent and a bit on returning calm to Corona-impacted Asian markets – this as OPEC+ members meet today to discuss the Corona Virus, which has cut Chinese oil imports by 20%. Traders await tonight’s API report.
In corporate news, Google shares fell 5% after missing expectations on revenue, revealing results for YouTube, Google Cloud and other divisions for the first time.
Tesla is up 20% (!) after its battery-making partner, Panasonic posted its first quarterly profit for their joint US battery producing enterprise – Gigafactory.
Still ahead today, quarterly earnings from Ralph Lauren, Ford, Seagate, Snapchat and Disney, the latter with expectations of $1.46 earnings per share – a 36% increase QoQ on revenues of EPS ext. $1.46 (+36% QoQ) $20.83 bn (+9% QoQ).
In aviation news, Ryanair has decided to order an additional batch of 737-MAXes, while Airbus has agreed to pay a €3.6 billion fine to settle corruption charges in the US and Europe.
IBM is announcing an early call on bonds due in 2021. And Citigroup has suspended the head of its High-Yield credit trading department after he was caught stealing from the cafeteria.
|9:30 AM GMT||UK||Markit Construction PMI (Jan)|
|10:00 AM GMT||Italy||Preliminary Consumer Price Index (Jan)|
|EU||Producer Price Index (Dec)|
|1:55 PM GMT||US||Redbook Index (Jan)|
|3 PM GMT||Factory Orders (Dec)|
|9:30 PM GMT||Oil||API Crude Oil Inventories|
|9:45 PM GMT||NZ||Employment, Labour Cost & Participation Rate|
|10 PM GMT||AUD||PMI (Jan) & Home Sales|
|1:30 AM GMT (+1)||RBA Gov. Lowe speech|
|1:45 AM GMT (+1)||China||Caixin Services PMI (Jan)|