Tuesday, February 4, 2020

Wall Street rebounds as the US economy shows no sign of slowing down

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

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Market Recap: Wall Street rebounds as the US economy shows no sign of slowing down

Wall Street surged on Monday thanks to better-than-expected economic data from the manufacturing sector in the US. The upbeat manufacturing sector data was enough to outweigh the surge of confirmed cases and death toll of the coronavirus outbreak.

In company news, Tesla shares spiked 19.89% on Monday after Panasonic Corp reported its first quarterly profit from its US battery business segment with the electric car maker. Alphabet Inc reported disappointing operating profit and revenue excluding Traffic Acquisition Costs on Tuesday morning, prompting its shares to plunge 4.33% in after-hours trading to US$1420.12 per share as of 8.24am (GMT +8).

Indexes Change (%) Net Change Closing Price
Dow Jones 0.51% 143.78 28,399.81
S&P500 0.73% 23.40 3,248.92
Nasdaq 1.34% 122.47 9,273.40
*Source: Bloomberg

The dollar surged against major currencies as the manufacturing sector in the US saw a rebound in January. ISM's manufacturing PMI spiked to 50.9, beating economists’ estimates of 48.5 in January as new orders, production and new export orders boosted the index. The report noted that while global trade remains an issue, many of the report's participants were positive for the first time in several months.

Sterling plummeted against both the dollar and euro after British Prime Minister Boris Johnson and EU Chief Negotiator Michel Barnier made conflicting speeches regarding the future trade relationship between the two countries. Investors viewed the speeches by both parties to be a likely preview of what to expect from negotiations between the UK and the bloc in 2020.

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Safe haven assets retreated on Monday as the US economy showed no signs of slowing down. Gold and yen both declined on the day. US treasuries fell as well, after surging last Friday, bringing benchmark 10-year yields higher by 2bps to 1.53%.

Safe Haven Assets Change (%) Net Change Closing Price
Gold -0.78% -12.43 1,576.73
Silver -2.00% -0.36 17.60
JPY -0.31% -0.34 108.69
*Source: Bloomberg
US Treasury yields Change (bps) Yield (%)
2-Year 4 1.35%
10-Year 2 1.53%
30-Year 1 2.01%
*Source: Bloomberg

Crude oil continued to tumble on Monday, as worries over China's demand for oil sharply declining in the short-term as a result of the coronavirus outbreak. Brent crude oil futures retreated 3.83%, or US$2.17 to US$54.45 per barrel.

Oil Futures Change (%) Net Change Closing Price
Brent Crude -3.83% -2.17 54.45
WTI Crude -2.81% -1.45 50.11
*Source: Bloomberg

Stocks in Asia was mixed on Tuesday morning as investors weigh the effects of the coronavirus outbreak on Asian companies. While the virus outbreak is mostly contained in China, a slump in China's economy is likely to spill over to other Asian countries as a result of reduced demand and a crunch in supply of certain goods. South Korea's KOSPI index made its first gain after declining for the last three trading sessions. The number of cases of the coronavirus reached 20,438 as of Tuesday morning and the death toll from the virus rose to 425.

Asia Change (%) Net Change Last Price As of (GMT +8)
Nikkei Index -0.33% -76.35 22,895.59 8:49:30 AM
KOSPI Index 0.96% 20.44 2,139.32 9:09:30 AM
ASX200 Index 0.19% 13.15 6,936.40 9:09:06 AM
*Source: Bloomberg

All eyes will be on Disney as they are set to report its quarterly earnings early tomorrow at 5.30am (GMT +8). Investors will be focused on its new streaming service, Disney+.

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

  • RBA's Decision on Monetary Policy (11.30am)
  • US Dec Factory Orders (11pm)
  • US Dec Durable Goods Orders (F) (11pm)