Wednesday, February 12, 2020

RBNZ keeps rates unchanged; SoftBank shares surge ahead of earnings report

Tags
  • China
  • Dollar
  • Stocks
  • Federal Reserve
  • Reserve Bank of New Zealand

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Market Recap: RBNZ keeps rates unchanged; SoftBank shares surge ahead of earnings report

US stocks ended Tuesday's session only slightly higher after pulling back from earlier gains after the Federal Trade Commission (FTC) was reportedly looking into tech company mergers. The S&P500 and Nasdaq edged out new highs while the DJIA remained flat on the day.

Indexes Change (%) Net Change Closing Price
Dow Jones 0.00% -0.48 29,276.34
S&P500 +0.17% +5.66 3,357.75
Nasdaq +0.11% +10.55 9,638.94
*Source: Bloomberg

The dollar fell against most major currencies after Fed Chair Jerome Powell commented on the risks of the coronavirus during his semiannual economic update before Congress. Powell first reiterated that the US economy remains resilient before acknowledging that the coronavirus poses risk to the US and global economy. The Dollar Index retreated 0.11% to 98.72. The RBNZ left rates unchanged at 1.00% on Wednesday morning, pushing NZD/USD higher towards 0.6440's level as of 9am (GMT +8). RBNZ Governor Adrian Orr will be speaking at the post-meeting press conference at 10am (GMT +8).

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Meanwhile safe haven assets fell on Tuesday after Chinese officials said that the coronavirus outbreak could be contained by April. Gold, yen and US Treasuries fell across the board. Benchmark 10-year yields advanced 3.1bps to 1.60%.

Safe Haven Assets Change (%) Net Change Closing Price
Gold -0.27% -4.26 1,567.89
Silver -0.67% -0.12 17.58
JPY -0.02% -0.02 109.79
*Source: Bloomberg
US Treasury yields Change (bps) Yield (%)
2-Year +3.0 1.42%
10-Year +3.1 1.60%
30-Year +2.7 2.07%
*Source: Bloomberg

Oil recovered on Tuesday as worries for a prolonged crunch on oil demand in China starts to fade. WTI crude oil futures were 0.44% or US$0.22 higher at US$50.16 per barrel on Wednesday morning as of 8.38am (GMT +8).

Oil Futures Change (%) Net Change Closing Price
Brent Crude +1.39% +0.74 54.01
WTI Crude +0.75% +0.37 49.94
*Source: Bloomberg

Stocks were mixed on Wednesday morning in Asia as the death toll and confirmed cases of the corona virus outbreak rises. The World Health Organisation (WHO) has officially named the new coronavirus “Covid-19”, and the death toll of the Covid-19 virus climbed to 1,112 as of Wednesday morning. The Nikkei started Wednesday's trading session 0.23% higher after the Tokyo Stock Exchange reopened after the National Day holiday in Japan. SoftBank shares soared 11.19% as of 8.30am (GMT +8) after T-Mobile won court approval for its US$26.5bn takeover of Sprint, a subsidiary of SoftBank.

Asia Change (%) Net Change Last Price As of (GMT +8)
Nikkei Index +0.57% +135.75 23,821.73 8:26:00 AM
KOSPI Index -0.16% -3.47 2,219.65 8:46:00 AM
ASX200 Index +0.52% +36.80 7,092.10 8:45:35 AM
*Source: Bloomberg

SoftBank (2pm) and Shopify (9.30pm) are set to report quarterly earnings later today while Cisco (5.30am) and Applied Materials (5.30am) are among the companies that will release their quarterly earnings report early tomorrow.

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

  • RBNZ Press Conference after monetary policy decision (10am)
  • Fed Chair Powell testifies before Senate Banking Panel (11pm)