Tuesday, January 14, 2020

BoE faces more pressure for rate cut; earnings season kicks off in the US

Tags
  • Dollar
  • Stocks
  • Oil
  • US earnings' season

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Market Recap: BoE faces more pressure for rate cut; earnings season kicks off in the US

Wall Street rallied on Monday as investors remain optimistic on this week's US-China phase one trade deal and upcoming quarterly earnings reports. Bloomberg reported that the US may no longer be calling China a currency manipulator, although no official announcement has been made by the US government yet. Easing US-China tensions and surging tech stocks contributed to the new record highs in the S&P500 and Nasdaq. Tesla spiked up 9.77%, closing the day at a record high level of $524.86 after an analyst from Oppenheimer raised his target price for the company to $612 per share, the highest out of Wall Street analysts.

Indexes Change (%) Net Change Closing Price
Dow Jones 0.29% 83.28 28,907.05
S&P500 0.70% 22.78 3,288.13
Nasdaq 1.04% 95.07 9,273.93
*Source: Bloomberg

Sterling fell sharply against the dollar after the UK posted weaker-than-expected manufacturing data for November. Industrial production fell 1.2% MoM while manufacturing production fell 1.7% MoM, falling short of economists' forecasts of 0.0% and -0.2% respectively. The sharp decline in the economic data sent implied probabilities for a rate cut by the BoE in January surging from 23.1% on Friday to 47.7% on Monday after the data was released.

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Meanwhile safe haven assets fell as investors started to shift back into risky assets, signalling that traders expect the US-China phase one trade deal and earnings from major US banks to boost markets this week. US Treasury yields gained as a result, with benchmark 10-year yields rising 3bps to 1.85%.

Safe Haven Assets Change (%) Net Change Closing Price
Gold -0.93% -14.46 1,547.88
Silver -0.86% -0.16 17.92
JPY -0.46% -0.50 109.95
*Source: Bloomberg
US Treasury yields Change (bps) Yield (%)
2-Year 1 1.58%
10-Year 3 1.85%
30-Year 2 2.30%
*Source: Bloomberg

Oil prices fell for the 5th session in a row on Monday as tensions in the Middle East fell, relieving worries of a disruption in oil supply. Brent Crude futures fell 1.20% while WTI Crude futures fell 1.63%.

Oil Futures Change (%) Net Change Closing Price
Brent Crude -1.20% -0.78 64.20
WTI Crude -1.63% -0.96 58.08
*Source: Bloomberg

In Asia, stocks look set to track US gains on Tuesday. The Nikkei, KOSPI and ASX200 all made gains early in Tuesday's trading session. US equity futures were also higher on Tuesday morning, signalling that the market is likely to continue to rally on Tuesday.

Asia Change (%) Net Change Last Price As of (GMT +8)
Nikkei Index 0.77% 184.78 24,035.00 8:15:20 AM
KOSPI Index 0.81% 18.08 2,244.83 8:35:20 AM
ASX200 Index 0.80% 55.33 6,960.00 8:35:06 AM
Hang Seng Futures 0.66% 190.00 29,152.00 2:59:53 AM
*Source: Bloomberg
US Futures Change (%) Net Change Last Price As of (GMT +8)
Dow Futures 0.20% 59.00 28,930.00 8:25:20 AM
S&P500 Futures 0.18% 6.00 3,296.00 8:25:20 AM
Nasdaq Futures 0.26% 23.50 9,111.75 8:25:20 AM
*Source: Bloomberg

Earnings season kicks off later today starting with major banks in the US. JPMorgan will release its Q4 earnings report at 8pm (GMT +8) while Wells Fargo is scheduled to release theirs at 9pm (GMT +8) later today. Citi is set to release its earnings report after the US stock market closes on Tuesday.

Economic releases in the day ahead (all timings in GMT +8):

  • US Dec Inflation Rate (CPI) (9.30pm)