Monday, January 20, 2020

US housing starts surge to 13-year high; oil prices surge on Monday morning

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

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Market Recap: US housing starts surge to 13-year high; oil prices surge on Monday morning

Wall Street continued its rally to fresh new highs on Friday. US housing starts spiked in December to 1.608mn from 1.365mn, beating economists' forecast of 1.380mn. The 16.9% jump in housing starts in December to a 13-year high signalled a likely recovery in the industry, driving stocks in the US. Consumer sentiment in January fell slightly to 99.1 from 99.3 in December. The slight drop was likely thanks to the conflict between Iran and the US earlier in the month, although the US-China phase one trade agreement was able to relieve pressure of the sentiment index. China's economy grew 6% in Q4 of 2019, further signalling that business sentiment is recovering.

Indexes Change (%) Net Change Closing Price
Dow Jones 0.17% 50.46 29,348.10
S&P500 0.39% 12.81 3,329.62
Nasdaq 0.34% 31.81 9,388.94
*Source: Bloomberg

Global indices rose over the week as the US-phase one trade agreement boosted stocks around the world. The DJIA, S&P500 and the Nasdaq advanced 1.82%, 1.97% and 22.9% over the week.

Indexes Weekly Change (%) Net Change Closing Price
Dow Jones 1.82% 524.33 29,348.10
S&P500 1.97% 64.27 3,329.62
Nasdaq 2.29% 210.08 9,388.94
FTSE100 1.14% 86.71 7,674.56
Euro Stoxx 0.49% 18.74 3,808.26
Nikkei 0.80% 190.69 24,041.26
KOSPI 2.00% 44.18 2,250.57
ASX200 1.95% 135.10 7,064.13
Hang Seng 1.46% 418.22 29,056.42
Straits Times 0.77% 25.08 3,281.03
*Source: Bloomberg

The dollar gained against most major currencies on Friday thanks to the jump in US housing starts. But the Dollar Index fell slightly by 0.03% over the week as traders using the greenback as a shelter from trade tensions likely shifted to more risky assets after global economic data signalled that global sentiment is recovering.

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Meanwhile safe haven assets extended gains on Friday. Gold gained 0.30%, The yen inched slightly higher by 0.02% against the dollar. The US treasury market was mixed, benchmark 10-year yields gained 1bps to 1.82% while 2-year yields inched 1bps lower to 1.56%.

Safe Haven Assets Change (%) Net Change Closing Price
Gold 0.30% 4.73 1,557.24
Silver 0.55% 0.10 17.91
JPY 0.02% 0.02 110.14
*Source: Bloomberg
US Treasury yields Change (bps) Yield (%)
2-Year -1 1.56%
10-Year 1 1.82%
30-Year 2 2.28%
*Source: Bloomberg

Crude oil prices surged on Monday morning after oil exports in Libya were threatened on Saturday. Ports in Libya were blocked on Saturday by supporters of Khalifa Haftar, potentially cutting output by roughly 800,000 barrels per day ahead of an international conference on Sunday that was aimed to end the civil unrest in Libya. Brent and WTI crude oil futures jumped 1.74% and 1.08% respectively when markets reopened on Monday morning.

Oil Futures Change (%) Net Change Closing Price
Brent Crude 0.36% 0.23 64.85
WTI Crude 0.03% 0.02 58.54
*Source: Bloomberg

On Monday morning, Asian stocks look likely to track US gains on Friday. The Nikkei, KOSPI and ASX200 all started the day's trading session higher and continued to gain in the morning. The PBoC's decision on its 1-year and 5-year LPRs will be due at 9.30am (GMT +8) is likely to boost stocks in the region as the central bank is expected to continue its stimulus for the economy. But Hong Kong equities may experience some downward pressure after protestors and police clashed again during a rally on Sunday, although recovering global business sentiment is likely to outweigh this.

Asia Change (%) Net Change Last Price As of (GMT +8)
Nikkei Index 0.17% 41.13 24,082.58 8:11:35 AM
KOSPI Index 0.59% 13.30 2,265.27 8:31:30 AM
ASX200 Index 0.30% 20.97 7,085.10 8:31:35 AM
Hang Seng Futures 0.11% 33.00 29,098.00 2:59:59 AM
*Source: Bloomberg

US equity futures continued to gain into Monday morning. But don't expect large movements in the futures markets as US markets will remain closed on Monday for the Martin Luther King Jr. holiday and will only reopen on Tuesday.

US Futures Change (%) Net Change Last Price As of (GMT +8)
Dow Futures 0.09% 26.00 29,304.00 7:58:09 AM
S&P500 Futures 0.08% 2.75 3,327.75 7:58:04 AM
Nasdaq Futures 0.11% 10.00 9,184.25 7:58:06 AM
*Source: Bloomberg

It's a busy week for chipmakers as earnings are set to be released from Texas Instruments and Intel. Multiple airlines in the US are also set to announce their quarterly earnings, including United Airlines, American Airlines and Southwest Airlines.

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

  • PBoC 5-Year/1-Year LPR decision (9.30am)
  • Japan Nov Industrial Production (12.30pm)
  • Germany Dec PPI (3pm)