Friday, January 31, 2020

BoE officials votes to leave rates unchanged; Amazon crushes revenue and earnings forecasts.

Tags
  • China
  • Dollar
  • Pound
  • Stocks
  • US earnings' season
  • Bank of England

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Market Recap: Global stocks gain thanks to WHO's announcement; Amazon crushes revenue and earnings forecasts

The WHO declared the coronavirus an international health emergency after meeting on Thursday. The decision came after the number of confirmed cases grew to 8,144 worldwide with 170 deaths. Stocks in the US erased early losses as the WHO declaration gave investors optimism that response efforts internationally will be stepped up. The DJIA, S&P500 and Nasdaq gained across the board.

Amazon reported better-than-expected earnings on Thursday, beating analysts’ estimates for both sales (US$87.4bn versus US$86.2bn) and EPS (US$6.47/share versus US$4.11/share). It's shares jumped as much as 12% in after-hours trading.

Indexes Change (%) Net Change Closing Price
Dow Jones 0.43% 124.99 28,859.44
S&P500 0.31% 10.26 3,283.66
Nasdaq 0.26% 23.77 9,298.93
*Source: Bloomberg

BoE's MPC voted 7-2 in favour of keeping rates unchanged at 0.75%. Cable jumped on the announcement to as high as 1.3110 while EUR/GBP fell to as low as 0.8412. But the central bank continued to adopt a dovish bias, cutting GDP forecasts and predicting inflation will only return to its target rate by the end of 2021, allowing sterling to recover slightly after sharply declining. Financial markets are now pricing in a rate cut by the last meeting of 2020.

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Safe haven assets were mixed as a result of the WHO announcement. Gold fell by 0.16% or US$2.55 to end Thursday’s trading session at US$1,574.28. Yen gained slightly against the greenback, although this was more likely due to the dollar falling as household spending and core PCE for Q4 2019 was lower than expected. US Treasuries were mostly flat on Thursday.

Safe Haven Assets Change (%) Net Change Closing Price
Gold -0.16% -2.55 1,574.28
Silver 1.60% 0.28 17.55
JPY 0.06% 0.06 108.96
*Source: Bloomberg
US Treasury yields Change (bps) Yield (%)
2-Year 0 1.41%
10-Year 0 1.59%
30-Year 1 2.05%
*Source: Bloomberg

Brent crude oil futures suffered its biggest decline since the US-Iran conflict earlier this month, falling 2.54% or US$1.52 to end Thursday's trading session at US$58.29 per barrel. WTI crude oil futures fell 2.23% on Thursday but recovered by 1.30% on Friday morning as of 8.17am (GMT +8) after the WHO said trade and travel restrictions were not necessary in response to the spread of coronavirus.

Oil Futures Change (%) Net Change Closing Price
Brent Crude -2.54% -1.52 58.29
WTI Crude -2.23% -1.19 52.14
*Source: Bloomberg

Asian stocks look set to track US gains on Friday, especially after China's manufacturing sector PMI met expectations to fall slightly to 50.0 in January. Non-manufacturing PMI in China beat expectations, reaching 54.1 instead of the consensus of 53.0. The Nikkei and KOSPI started Friday's trading session 0.74% and 0.59% higher.

Asia Change (%) Net Change Last Price As of (GMT +8)
Nikkei Index 1.15% 264.62 23,242.37 8:47:50 AM
KOSPI Index 0.67% 14.30 2,162.30 9:07:50 AM
ASX200 Index 0.52% 36.27 7,044.70 9:07:35 AM
*Source: Bloomberg

Caterpillar (7.30pm), Exxon (8.30pm) and Chevron (11.59pm) are set to report their quarterly earnings later today.

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

  • Eurozone Jan Inflation Rate (CPI) (6pm)
  • Eurozone Q4 GDP (6pm)
  • Canada Nov GDP (9.30pm)
  • US Dec Inflation Rate (PCE) (9.30pm)
  • US Consumer Sentiment Index (U. of Mich) (11pm)
  • Brexit (7am +1)