Friday, February 7, 2020

China cuts tariffs on US goods by half, Twitter's shares spike after beating estimates

Tags
  • China
  • Dollar
  • Euro
  • Stocks
  • NonFarm Payrolls
  • US earnings' season

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Market Recap: China cuts tariffs on US goods by half, Twitter’s shares spike after beating estimates

Wall Street continued to advance on Thursday as China steps up measures to boost investor sentiment. China said on Thursday that it will cut tariffs by half on US$75bn worth of US imports starting from February 14th as part of the phase one deal between the two. Beijing's announcement helped to lift stocks around the globe, pushing Asian stocks higher on Thursday and in turn helped stocks in the US extend its rally for one more day.

In company news, Twitter shares soared 15.03% to US$38.41 per share after its quarterly revenue and daily active user base beat estimates (Revenue: US$1.1bn (A) vs US$994.5mn (E); Daily Active users: 152mn (A) vs 148.1mn (E)).

Kellogg shares dived 8.51%, to US$63.46 per share after its weak outlook to 2020. The company beat EPS and revenue estimates for its latest quarter (EPS: US$0.91 (A) vs US$0.86 (E); Revenue: US$3.22bn (A) vs US$3.18bn (E)) but fell short of earnings forecast after it said that it expected EPS to fall as much as 4% this year.

Uber reported quarterly figures that were mostly in line with estimates (Gross bookings: US$18.13bn (A) vs US$ 18.03bn (E); EPS: -US$0.64 (A) vs -US$0.65 (E); Uber Eats bookings: US$4.37bn (A), US$4.21bn (E)). Its shares were 6.23% higher in after-hours trading as of 8.51am (GMT +8) after the company revealed its target to be profitable in the fourth quarter of 2020.

Indexes Change (%) Net Change Closing Price
Dow Jones +0.30% +88.92 29,379.77
S&P500 +0.33% +11.09 3,345.78
Nasdaq +0.67% +63.47 9,572.15
*Source: Bloomberg

The dollar gained against major currencies after initial jobless claims beat economists' estimates, growing only 202,000 the last week instead of the expected 215,000. The euro retreated after Germany’s factory orders in December largely missed economists’ forecasts, declining 2.1% MoM instead of a 0.6% growth.

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Gold continued to advance while the yen weakened against the dollar on Thursday. Investors continues to use gold as a hedge against an extended rally in the equities market. US Treasuries were mostly higher, with Benchmark 10-year yields losing 0.9bp to 1.64%.

Safe Haven Assets Change (%) Net Change Closing Price
Gold +0.68% +10.64 1,566.66
Silver +1.20% +0.21 17.60
JPY -0.15% -0.16 109.99
*Source: Bloomberg
US Treasury yields Change (bps) Yield (%)
2-Year +0.2 1.45%
10-Year -0.9 1.64%
30-Year -3.0 2.11%
*Source: Bloomberg

Oil futures were mixed on Thursday as OPEC+ members are still unable to agree on a solution to curb a dive in crude oil prices as a result of the coronavirus outbreak in China.

Oil Futures Change (%) Net Change Closing Price
Brent Crude -0.63% -0.35 54.93
WTI Crude +0.39% +0.20 50.95
*Source: Bloomberg

Asian equity markets started Friday’s trading session mixed, signalling a possible correction in prices. The Nikkei was slightly higher while the KOSPI looks set for losses in the early hours of the trading day. Investors are likely to be cautious as a result of a three-day rally in Asia even as the coronavirus outbreak continues to spread at an accelerated rate. The death toll and confirmed cases of the outbreak reached 636 and 31,161 respectively in China on Friday morning.

Asia Change (%) Net Change Last Price As of (GMT +8)
Nikkei Index +0.25% +60.85 23,921.23 8:12:45 AM
KOSPI Index -0.93% -20.61 2,207.03 8:32:40 AM
ASX200 Index -0.37% -25.80 7,021.70 8:32:36 AM
*Source: Bloomberg

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

  • Germany Dec Industrial Production (3pm)
  • US Jan Change in NonFarm Payrolls (9.30pm)
  • Canada Jan Unemployment Rate (9.30pm)