Thursday, February 13, 2020

Kiwi surges against the dollar; New cases of coronavirus spikes up by 14,840 in Hubei

Tags
  • China
  • Dollar
  • Stocks
  • Oil
  • US earnings' season
  • NZD

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Market Recap: Kiwi surges against the dollar; New cases of coronavirus spikes up by 14,840 in Hubei

Stocks on Wall Street rose to new record highs on Wednesday amid news that the coronavirus' rate of infection may be slowing down. China reported its lowest number of new coronavirus cases on Wednesday, lifting optimism in financial markets that the virus outbreak may have reached its peak. The S&P500 and Nasdaq set new record highs for the third trading session in a row. The energy and technology sectors led gains in the S&P500, rising 1.36% and 1.06% on Wednesday respectively.

Indexes Change (%) Net Change Closing Price
Dow Jones +0.94% +275.08 29,551.42
S&P500 +0.65% +21.70 3,379.45
Nasdaq +0.90% +87.02 9,725.96
*Source: Bloomberg

The kiwi surged against the dollar on Wednesday after the RBNZ kept monetary policy in New Zealand on hold and signalled that the central bank is adopting a hawkish bias with little probability of a rate cut this year. The RBNZ said that the improving economic conditions in New Zealand is evidence that the easing cycle in 2019 is working and it expects the negative impact from the coronavirus outbreak to be limited. NZD/USD spiked 0.95% to 0.6467 on Wednesday.

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Safe haven assets retreated for the second session in a row as risk aversion among investors fell thanks to optimism for a slowing coronavirus outbreak. Gold, yen and US Treasuries fell across the board. Benchmark 10-year yields rose 3.3bps to 1.63%.

Safe Haven Assets Change (%) Net Change Closing Price
Gold -0.12% -1.83 1,566.06
Silver -0.91% -0.16 17.47
JPY -0.27% -0.30 110.09
*Source: Bloomberg
US Treasury yields Change (bps) Yield (%)
2-Year +2.0 1.44%
10-Year +3.3 1.63%
30-Year +2.3 2.09%
*Source: Bloomberg

Oil advanced on Wednesday as worries for an extended fall in demand was relieved after workers in China returned to their jobs earlier this week and as Chinese President Xi Jinping said that the country will meet its economic goals despite the coronavirus outbreak. OPEC cut forecasts for oil demand growth by 440,000 barrels per day in the first quarter of the year late on Wednesday, expecting the coronavirus outbreak to hit China's consumption of oil. WTI crude oil futures fell early in Thursday's trading session, falling 0.29%, or US$0.15 to US$51.02 per barrel as of 8.41am (GMT +8).

Oil Futures Change (%) Net Change Closing Price
Brent Crude +3.30% +1.78 55.79
WTI Crude +2.46% +1.23 51.17
*Source: Bloomberg

Asian stocks may face headwind from China's revision to its coronavirus outbreak data on Thursday. The Hubei province in China reported 14,840 new cases on Thursday morning after revising its method for counting infections to include "clinically diagnosed" cases in its daily disclosure. Of the 14,840 new cases, 13,332 cases are from the new category. Under the new revision, the death toll in the province climbed by 242, in which 135 are from the new category. The total number of cases rose to 60,161 and the number of deaths increased to 1,365. Major indices in the region were mixed on Thursday morning, with Nikkei falling early in the trading session while the KOSPI and ASX200 advanced.

Asia Change (%) Net Change Last Price As of (GMT +8)
Nikkei Index -0.18% -43.50 23,817.71 8:32:35 AM
KOSPI Index +0.39% +8.65 2,247.03 8:52:30 AM
ASX200 Index +0.26% +18.37 7,106.60 8:52:35 AM
*Source: Bloomberg

Nestle (2.15pm), Barclays (3pm), Airbus (2.30pm) and Alibaba (8.30pm) will report quarterly earnings later today while Nvidia (5.20am), is set to announce theirs early tomorrow. (All timings in GMT +8)

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

  • Germany Jan Inflation Rate (CPI) (3pm)
  • US Jan Inflation Rate (CPI) (9.30pm)
  • US Jan 8 Initial Jobless Claims (9.30pm)