Monday, February 3, 2020

Stocks falls on Friday to erase gains earlier in the year; earnings season continues this week

Tags
  • China
  • Dollar
  • Pound
  • Stocks
  • US earnings' season
  • ISM PMI

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Market Recap: Stocks falls on Friday to erase gains earlier in the year; earnings season continues this week

Stocks in the US extended losses on Friday as the coronavirus outbreak in China shows no sign of slowing down. Wall Street's major indices all suffered losses on Friday, despite strong earnings from Amazon.

Indexes Daily Change (%) Net Change Closing Price
Dow Jones -2.09% -603.41 28,256.03
S&P500 -1.77% -58.14 3,225.52
Nasdaq -1.59% -148.00 9,150.94
*Source: Bloomberg

Equities markets continued to be plagued by the ongoing coronavirus outbreak to fall for the second week in a row. Hong Kong’s Hang Seng Index were the biggest loser last week, tumbling down 5.86%. As a result, most stocks around the globe suffered losses during the month of January, with the exception of the Nasdaq and ASX200.

Indexes Weekly Change (%) Net Change Closing Price
Dow Jones -2.53% -733.70 28,256.03
S&P500 -2.12% -69.95 3,225.52
Nasdaq -1.76% -163.98 9,150.94
FTSE100 -3.95% -299.97 7,286.01
Euro Stoxx -3.66% -138.25 3,640.91
Nikkei -2.61% -622.00 23,205.18
KOSPI -5.66% -127.12 2,119.01
ASX200 -1.03% -73.34 7,017.20
Hang Seng -5.86% -1637.01 26,312.63
Straits Times -2.66% -86.29 3,153.73
*Source: Bloomberg

The dollar fell against most major currencies on Friday as a result of mixed economic data. Personal spending remained robust although personal income in December was weaker-than-expected, signalling that 2020's consumption growth in the US might be slower than expected as well. The Chicago PMI fell to 42.9, much lower than economists' forecasts of 48.9 thanks to slowing new orders and as producers forecast weak activity in 2020. The University of Michigan's final revision for consumer sentiment improved to 99.8 from 99.1 earlier in the month.

Sterling extended gains on Friday, surging 0.86% against the dollar as the UK finally exits the EU bloc, allowing it to start negotiations with the bloc on its new long-term relationship.

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Meanwhile, safe haven assets continue to climb as a global economic slowdown starts to look more likely. Gold, yen and US Treasuries gained on Friday. US treasury yields declined sharply, with 2-year yields tumbling 10bps to 1.31% and 10-year yields retreating 8bps to 1.51%.

Safe Haven Assets Change (%) Net Change Closing Price
Gold 0.95% 14.88 1,589.16
Silver 1.14% 0.20 17.79
JPY 0.56% 0.61 108.35
*Source: Bloomberg
US Treasury yields Change (bps) Yield (%)
2-Year -10 1.31%
10-Year -8 1.51%
30-Year -5 2.00%
*Source: Bloomberg

Oil continues to face headwinds as OPEC starts to push for an emergency meeting for a discussion on a potential response to plunging oil prices. Both Brent and WTI crude futures fell on Friday and continued to decline on Monday morning after Bloomberg reported that China's oil demand dropped by roughly 200mn barrels a day or 20% of its total consumption. Russia now says that it is open to Saudi Arabia's push for an emergency meeting, with potential dates for the gathering being on February 8th to 9th or February 14th to 15th.

Oil Futures Change (%) Net Change Closing Price
Brent Crude -1.24% -0.71 56.62
WTI Crude -1.11% -0.58 51.56
*Source: Bloomberg

Asian stocks look set to suffer at the start of the week. As of Monday morning, China reported that the death toll from the coronavirus has reached 361, with confirmed infections in the country soaring to more than 17,000. Expect a sharp drop in Chinese stocks as they reopen after more than a week of closure as a result of an extended Lunar New Year holiday.

Asia Change (%) Net Change Last Price As of (GMT +8)
Nikkei Index -1.24% -288.71 22,916.47 8:03:00 AM
KOSPI Index -1.58% -33.56 2,085.45 8:23:00 AM
ASX200 Index -1.50% -105.60 6,911.60 8:22:35 AM
*Source: Bloomberg

Earnings season continues this week with results from Big Pharma companies (Merck, GlaxoSmithKline, Bristol-Myers Squibb), tech giants (Alphabet, Twitter, Baidu) automakers (Fiat Chrysler, Toyota, Ford, GM, Honda) as well as Disney.

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

  • US Jan Manufacturing PMI (ISM) (11pm)