News / Analysis
Finance Update – Powell ReconsidersFebruary 13, 2020
As the Coronavirus continues to wreak havoc with world markets, Thursday’s death toll in the Hubei Province soared to 242 in a single day, pushing the Yuan down by 5 cents.
Meanwhile, Apple supplier Foxconn said Reuters’ report on resumption of activities was erroneous. Thus, Asian markets continued down about a half percent overnight, Australia’s S&P/ASX200 being the odd man out with a 0.21% increase.
Japan’s producer price index doubled in January (YoY) to 1.7%, pushing the yen by 50 pips, before returning the gain. Consumer inflation expectations in Australia for February are down half a percent to 4%, the reading ending a short uptick in the AUD.
European markets rose on a weakening Euro – the DAX up by 0.89%, the FTSE 0.47%, and the CAC 0.83%. December’s industrial production in the EU contracted by a whopping 4.1% YoY, quashing the Euro by another 50 pips against the dollar.
The pound has been falling since peaking yesterday afternoon, despite overnight UK housing prices, which increased in January by 17% – a 4-year record.
Despite his confidence in continuing wage rises and job creation, Fed head Jerome Powell yesterday told the Senate Banking Committee that his organization was preparing to adopt additional quantitative easing measures to stave off a possible recession.
The central bank, he said, would purchase large amounts of government bonds to pressure long-term interest rates down. The dollar weakened on the announcement, but US markets were up nearly a percent (DOW: 0.94%, Nasdaq: 0.9%).
Earlier, Treasury Sec. Mnuchin said his boss’ tax cuts would pay for themselves over a 10-year period, despite a trillion-dollar near-term deficit.
Gold is up $15 per troy ounce on dollar weakness, while oil is down 60 cents a barrel after the EIA yesterday delivered a disappointing 7.5mB increase in crude oil inventories.
The reason for the muted reaction is stronger output cut expectations from OPEC+ based on a drop in Chinese Corona-inflicted demand.
Bitcoin continues its upward trend, present since bottoming out at 6584 in December, holding well above the 10K mark for the 3rd day in a row.
Credit Suisse this morning posted a 69% increase in net profits, despite continued negative central bank interest. Germany’s Commerzbank this morning reported a less-than-expected drop in losses on a 0.5% increase in revenue.
Thyssenkrupp, on the other hand, posted a 77% loss in profits due to weak steel demand; shares for the quarter were down 0.6%. Airbus shares lost about $5 per share during Q4 despite 2019 revenues that are up 11% YoY.
Later today, Ford, Nvidia, and Cisco will be reporting during the US session. Cisco’s yesterday said that Q2 revenues cut the yearly figure by about 4% resulting in a 3% increase in dividends YoY and 5% YoY on EPS which was up to 77 cents. Tomorrow – Beyond Meat and Pepsico.
|07:00 AM GMT||Germany||CPIs (Jan)|
|01:30 PM GMT||US||CPIs & Jobless claims|
|11:50 PM GMT||New Zealand||Business PMI|
|02:00 AM GMT (+1)||China||Fixed Asset Investments, Retail Sales & Fixed Asset Investments|