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Top 5 Things to Know in the Market on Friday, 7th February

2020-02-07 16:56:40

1. Dollar marches higher as caution sets in

The dollar hit its highest level in four months on perceptions that the U.S. economy is better insulated from the coronavirus than most other economies around the world.

The dollar index, which measures the greenback against a basket of developed market currencies, rose as high as 98.55 on the back of weak industrial production data out the euro zone that pushed the euro briefly below $1.0950.

However, it has also surged this week against emerging market currencies, many of which have been hit by the recent collapse in prices for oil and other industrial commodities. The dollar hit an all-time high against the Brazilian real and a six-month high against the Thai baht on Wednesday after those countries’ central banks cut their key rate interest rates, and it hit a four-month high against the ruble on Friday as the central bank of Russia followed suit.

The dollar also pushed through 7 Chinese yuan again overnight on a wave of public criticism of the authorities’ handing of the virus, undermining confidence that Beijing is on top of the public health emergency.

2. Payrolls Day

It’s payrolls day! The Bureau of Labor Statistics is set to release its monthly employment report at 8:30 AM ET (1330 GMT), with analysts polled by predicting a rise of 160,000 in nonfarm payrolls and an unchanged unemployment rate of 3.5%.

The risk for the headline number is for an upside surprise, given the much stronger-than-expected private-sector payrolls report from ADP (NASDAQ:ADP) earlier in the week.

Average weekly hours are expected to remain stable from December at 34.3, while average hourly earnings growth is expected to tick back up to 3.0% after dipping slightly at the end last year.

3. Stocks set to open lower

U.S. stocks are set to open sharply lower Friday on fears that this week’s rally has gone too far, too fast.

By 6:40 AM ET (1130 GMT), Dow 30 futures were down 128 points, or 0.4%, while the S&P 500 Futures and Nasdaq 100 futures contracts were both down by the same amount.

Chinese and European shares had also traded lower overnight, the latter in particular hit by the biggest drop in German industrial production in a decade, while the former suffered from a loss of investor confidence as public anger mounted at the authorities’ handling of the coronavirus outbreak.

Pinterest (NYSE:PINS) stock may be among the outperformers after a better-than-expected quarterly update after the close on Thursday.

4. Uber's earnings set for good reception

Uber (NYSE:UBER) stock is set to open at highest level since August after the company predicted it would make its first quarterly profit – at least on an adjusted basis - by the end of the year. That’s a year earlier than CEO Dara Khosrowshahi had previously guided for.

The stock has risen more than 50% from a post-IPO low hit when early investors Goldman Sachs (NYSE:GS) and ex-CEO Travis Kalanick were dumping their holdings. Uber (NYSE:UBER) has also eased its cash burn by withdrawing from an increasing number of markets where it was not profitable.

However, the company’s losses still widened to over $1 billion in the fourth quarter, and Khosrowshahi promised to double-down this year on food delivery business UberEats, whose losses have consistently hurt the overall bottom line.

In related news, activist investor Elliott Management announced it had built a stake in Softbank, which has made a series of underperforming bets on startups such as Uber (NYSE:UBER) in recent years.

5. Thiam ousted as Credit Suisse's CEO

Tidjane Thiam resigned as chief executive of Credit Suisse (SIX:CSGN) in the wake of an embarrassing spying scandal. The Zurch-based institution rallied around its long-serving Swiss chairman Urs Rohner, who was understood to have been angered by the damage to the bank’s reputation from an episode in which management assigned detectives to follow wealth management head Iqbal Khan as he jumped ship to rival UBS.

Thiam had the support of major institutional shareholders, especially U.S. ones, who warmed to his focus on wealth management and Asia, and to his de-risking of the institution’s bloated investment bank.

However, Thiam leaves with his revolution unfinished, and with the bank’s stock down over 30% from when he was appointed. Credit Suisse (SIX:CSGN) stock fell another 3.1% in Zurich.

Thiam will be succeeded by Thomas Gottstein, the head of the bank’s domestic operations.

Top 5 Things to Know in the Market on Thursday, 6th February

2020-02-06 18:54:13

1. China cuts tariffs on U.S. imports

China said it will cut tariffs on an annual $75 billion worth of U.S. imports from Friday, reciprocating the partial roll-back in U.S. tariffs on Chinese goods that the two sides agreed last month.

Although the step was as expected and hardly moved the price of commodities that were affected such as soybeans and oil, it cements the recent truce between the two and supports hopes that the biggest drag on the global economy will fade this year.

The news overshadowed hints elsewhere from the Chinese press that the government may seek to use the coronavirus outbreak as an excuse not to buy the full volume of U.S. goods it agreed to in January.

Elsewhere, China’s biggest buyer of gas CNOOC reportedly declared force majeure on contracts to import liquefied natural gas, a reflection of the collapse in industrial demand following the extended shutdown of Chinese factories due to the outbreak.

2. Global markets extend risk rally, mostly

The headlines on the tariff cuts were still all that was needed to justify another move up in global stock markets overnight. Major Chinese stock indices rose by between 1.4% and 2.8%, while the Euro Stoxx 600 hit a new all-time high before retracing its gains.

However, commodities and emerging market currencies were less impressed. Crude futures gave up early gains after reports that China is also looking to cut purchases of Saudi Arabian oil due to the coronavirus impact on local demand, amidst reports that refineries have slashed throughput.

Copper futures also could only drift sideways, while there were better bids for haven metals Gold and Silver than for industrial ones such as Aluminum and Nickel.

The virus itself continues to spread, although both the incidence of new cases and the death toll are rising more slowly than at any time so far during the outbreak. “The trend rate of increase is slowing,” said Ian Shepherdson, chief economist at Pantheon Economics in London.

3. OPEC+ officials reportedly recommend further oil output cuts

The world’s biggest oil exporters look set to cut their production even more deeply in order to restore balance to an oversupplied global market suffering from the impact of the coronavirus.

Newswire reports suggested that the technical experts from the Organization of Petroleum Exporting Countries and allies including Russia would recommend additional supply cuts of 600,000 barrels a day. That compares with an estimate from BP (LON:BP) earlier this week that the virus could hit destroy an average of 400,000 b/d over the whole year.

However, it wasn’t clear whether Russia’s government would support the action. Russia has argued that U.S. shale producers should take more of the strain in balancing the market, having ramped up their output considerably at the cartel’s expense last year.

Crude markets reacted cautiously: U.S. crude futures were up 0.9% at $51.88 a barrel, while Brent was up 0.2% at $55.38, but both blends were off intra-day highs posted earlier.

4. Stocks set to open higher; Qualcomm (NASDAQ:QCOM) disappoints, Philip Morris (NYSE:PM), Uber (NYSE:UBER) earnings due

U.S. stock markets are set to open modestly higher after another big jump on Wednesday, helped by the continuation of the rally in overseas markets.

By 6:30 AM ET (1130 GMT), Dow 30 futures were up 112 points, or 0.4%, with the Nasdaq 100 futures contract rising in parallel and the S&P 500 contract lagging only slightly, up 0.3%

After the bell on Wednesday, chipmaker Qualcomm (NASDAQ:QCOM) had lowered its guidance range the year through September, citing the potential impact of the coronavirus. Yum China Holdings (NYSE:YUMC) had also said it had temporarily closed over 30% of its 9,000 outlets due to the outbreak.

The day’s earnings roster is led by Philip Morris (NYSE:PM) and Bristol-Myers Squibb (NYSE:BMY), with updates also due from Cigna (NYSE:CI), S&P Global (NYSE:SPGI), Estee Lauder (NYSE:EL) and T-Mobile US. Uber and Wynn Resorts report after the closing bell.

5. Lagarde warns on further easing scope; German orders fall

European Central Bank President Christine Lagarde told the EU parliament that the current environment of low interest rates has left the bank with “reduced scope” to provide further support to the economy with monetary policy.

Her words mark a change in emphasis from predecessor Mario Draghi, who never failed to talk up the possibility of further easing, even as outside analysts cast doubt on the diminishing returns of its extraordinary stimulus measures.

Lagarde’s comments came after a surprising 2.1% drop in German factory orders in December, leaving them down over 8% on the year and suggesting that the manufacturing slump in the euro zone’s largest economy still hasn’t run its course. The euro stayed stuck at $1.1000.

Top 5 Things to Know in the Market on Wednesday, 5th February

2020-02-05 18:26:53

1. Coronavirus toll nears 500; markets grasp at news of drug progress

The death toll from the coronavirus reached 493, another rise of over 16% on the previous day, but more than twice as many people infected by the disease have now recovered. Fatal cases remain highly concentrated in the Hubei region around Wuhan, where the outbreak originated.

Markets in Europe picked up on reports of progress by lab researchers with drugs aimed at treating the disease, while an institute in Wuhan applied for a patent on an antiviral drug developed by Gilead Sciences (NASDAQ:GILD), threatening to revive U.S.-China tensions over intellectual property.

Apple (NASDAQ:AAPL) supplier Hon Hai revised down its sales outlook for the year citing the virus, while Disney said it expects the closure of its theme parks in Shanghai and Hong Kong to hit operating profits by a combined $175 million.

2. Stocks, oil set for higher opening on virus optimism

U.S. stock markets are set for another strong opening, helped by more solid gains in Asia and Europe overnight, which in turn reflected the Chinese central bank’s liquidity measures this week and the – still somewhat speculative - reports of progress in finding drugs to treat the coronavirus.

By 6:30 AM ET (1130 GMT), Dow 30 futures were up 264 points or 0.9%, while S&P 500 futures were up 0.9% and Nasdaq 100 futures were up 1.0%.

In China, the Shanghai Composite had ended up 1.3% while in Europe, the Stoxx 600 was up 1.1%.

Crude oil futures had rebounded overnight after dipping below $50 for the first time in a year. U.S. crude futures were up 2.9% at $51.06 a barrel, while gold futures were flat at $1,556.15 and the U.S. 10-Year benchmark Treasury yielded 1.64%, up three basis points from late Tuesday.

The bounce in crude is set to be tested by the release of government inventory data at 10:30 AM ET (1530 GMT).

3. GM earnings in focus after Ford slumps; ICE-eBay tie-up also eyed

Earnings seasons grinds on, with the focus Wednesday falling on General Motors after Ford Motor slumped 10% in after-hours trading on the back of a gloomy outlook for 2020. Ford’s figures made for an interesting counterpoint to the wild, but volatile, surge in Tesla (NASDAQ:TSLA) stock on Tuesday amid signs that the company’s valuation had lost all relation to any realistic development in sales and profit in the near term.

Also reporting in the course of the day are pharma giant Merck, Humana, Boston Scientific , Spotify and Metlife. Qualcomm completes day's action after the bell.

Another stock likely to be in focus Wednesday is Intercontinental Exchange Group. ICE (NYSE:ICE), which owns the New York Stock Exchange, confirmed late on Tuesday it had offered to buy struggllng online marketplace eBay (NASDAQ:EBAY), in a radical departure for a group which has so far concentrated only on wholesale financial markets. ICE stock, which fell 7.5% on Tuesday on initial reports of talks, recovered 0.8% in after-hours trading as it emerged that no talks were currently in progress.

4. ADP's report to trail Friday payrolls ballyhoo

ADP (NASDAQ:ADP) will update the market on the U.S. private-sector labor market, amid expectations of a slowdown in hiring at the start of the year after the December numbers surged to a seven-month high.

Analysts polled by expect a gain of 156,000 in what is widely seen as the dress rehearsal for the broader government report on payrolls on Friday. The report is due at 8:15 AM ET.

Economic data around the world were mixed: China’s service-sector purchasing managers index fell short of expectations, while the same index in the euro zone outperformed, pushing the composite PMI to a five-month high of 51.3. The ISM’s survey of non-manufacturing activity will be released at 10 AM ET.

5. Buttigeig wins in Iowa as Washington theatricals intensify

Pete Buttigeig emerged as the winner of the Democratic Party’s Iowa caucuses, with Vermont Senator Bernie Sanders a close second and Massachusetts Senator Elizabeth Warren a respectable third. Former Vice-President Joe Biden trailed badly in fourth place after a lackluster campaign.

Buttigeig capitalized on the inability of Sanders and Warren to campaign more actively in the state during the impeachment trial of President Donald Trump, which is expected to end today with his acquittal by a Republican-controlled Senate.

Trump’s State of the Union address on Tuesday passed without any major policy initiatives being announced, leaving the public to focus on a theatrical exchange of insults between the President and House Speaker Nancy Pelosi.

Top 5 Things to Know in the Market on Tuesday, 4th February

2020-02-04 21:04:04

1. China's markets stabilize as PBoC opens the taps again

China’s stock markets stabilized after the central bank said it would inject another 500 billion yuan in one- and two-week repos to “ensure adequate liquidity” as fears around the economic impact of the novel coronavirus continued to swirl. Governor Haruhiko Kuroda said the Bank of Japan, too, would act, if necessary, to mitigate any impact on the Japanese economy.

The Shanghai Composite index responded with a bounce of 1.3%, while China’s other markets bounced even more. Commodities such as Brent crude and copper futures also rebounded.

The virus continues to spread, however, with the number of reported deaths hitting 425 and the number of reported cases topping 20,000. Macau, the country’s gambling capital, closed its casinos, while Hong Kong-based airline Cathay Pacific slashed its flights to the Chinese mainland by 90%.

2. Alphabet's transparency disappoints

Alphabet’s new chief executive Sunder Pichai spread more light on the performance of some of the company’s most important operations – and many weren’t too impressed with what they saw.

Alphabet (NASDAQ:GOOGL) said YouTube’s revenue in 2019 was $15 billion, at the lower end of a range of guesses that analysts had had to make prior to the disclosure. For comparison, the company’s Cloud storage business pulled in $10 billion, somewhat more than expected but still comfortably behind rivals Amazon's (NASDAQ:AMZN) AWS and Microsoft’s Azure.

Overall, the group’s results disappointed, with operating income missing forecasts by more than 6% and revenue growth slowing further.

3. Stocks set to open sharply higher

U.S. stock markets are set to open sharply higher again on Tuesday after the Chinese central bank’s intervention steadied the global picture.

By 6:30 AM ET, Dow 30 futures were up 296 points, or 1.0%, while S&P 500 Futures were up 1.1% and the Nasdaq 100 futures contract was up 1.2%.

European market has also joined the risk-on move, with the benchmark Stoxx 600 rising 1.0% and the commodity-heavy FTSE 100 rising 1.3%. That was despite warnings from brewer Carlsberg (CSE:CARLa) and jeweller Pandora (CSE:PNDORA) about the impact of the coronavirus on the outlook for 2020.

Earnings season cranks up a gear after a quiet start to the week, with reports coming from Walt Disney, Ford Motor, Gilead Sciences, Snap, Chipotle Mexican Grill, Chubb and ConocoPhillips(NYSE:COP). Ferrari, Allstate and Royal Caribbean Cruises are also due.

4. Iowa shambles for Dems

The campaign for the Democratic Party nomination got off to a shambolic start as the party’s vote counters failed to announce the result of the Iowa caucuses, citing “inconsistencies in the reporting.”

The party said its data had not been tampered with.

With no official numbers yet available, the respective candidates all talked up their assessment of their performances. However, a number of unofficial counts appeared to suggest that former vice-president Joe Biden had polled well behind rivals Bernie Sanders, Elizabeth Warren and Pete Buttigeig.

5. OPEC officials meet to discuss deeper cuts; API inventories due

Technical experts from the Organization of Petroleum Exporting Countries descended on Vienna for a meeting to build a consensus how they can bring a cratering oil market back into balance.

According to various reports, the experts will consider an extra cut of up to 500,000 barrels a day beyond those already agreed between OPEC and allied producer nations led by Russia. They’ll also discuss moving up a ministerial meeting to review the current arrangements to this month, from the scheduled date in late March.

Earlier, BP (LON:BP) chief financial officer Brian Gilvary said the company expected the coronavirus to cut global demand for the whole of this year by between 300,000 and 500,000 barrels a day. That’s around one-third of all the demand growth predicted by OPEC and the International Energy Agency.

Top 5 Things to Know in the Market on Monday, 3rd February

2020-02-04 06:25:20

1. China markets tumble on reopening after holiday

China’s financial markets shook as they reopened after an extended Lunar New Year holiday. The main stock markets in Shanghai and Shenzhen fell some 8%, and the yuan fell 1.2% against the dollar to its lowest in eight weeks – once again breaching the psychologically important level of 7 to the dollar.

That happened despite a ban on short-selling by the stock market regulator and the injection of a net $22 billion into the domestic money market by the central bank. The People’s Bank of China effectively chose to roll over all of the extra seasonal liquidity that it pumped in ahead of the holidays, and add a little more for good measure.

There has been no major change in the narrative around the outbreak over the weekend: the death toll rose to 361 from 17,205 confirmed cases.

2. Markets set to bounce at opening

U.S. stocks are set to open with a bounce on Monday after a Friday session where selling had accelerated into the close.

By 6:30 AM ET (1130 GMT), Dow 30 futures were up 107 points, or 0.4%, while S&P 500 Futures were up 0.4% and the Nasdaq 100 futures contract was up 0.5%.

European markets had also opened broadly higher, with the benchmark Stoxx 600 index edging up 0.1%. Commodities had also stabilized, with copper futures set to break a run of 13 straight down days. The dollar index, meanwhile, strengthened by 0.3%, due chiefly to gains against the euro and sterling.

3. Alphabet's numbers are up next

Alphabet (NASDAQ:GOOGL), the parent company of Google, reports its quarterly results after the closing bell on Monday, the first time under the leadership of Sundar Pichal.

Analysts polled by expect earnings per share to have fallen some 2% year-on-year to $12.50 a share, on a 19% rise in revenue to $46.9 billion.

Alphabet (NASDAQ:GOOGL) stock gained 7% in January, outperforming the broader market after underperforming with a gain of only 19% in 2019.

Investors will be looking for as much detail as possible on the contribution of cash cow YouTube, as well as the progress of self-driving technology unit Waymo, among other things.

4. Sterling tumbles as post-Brexit era starts awkwardly

The pound tumbled over 1% against the dollar and nearly 0.8% against the euro as the post-Brexit era began with some confrontational rhetoric out of London.

U.K. Prime Minister Boris Johnson said in a keynote speech that he would rather accept tariffs than the jurisdiction of the European Court of Justice, reviving the risks of an economically damaging rupture with the EU at the end of an agreed transition period which ensures that nothing essentially changes in the U.K.-EU relationship until the end of the year.

The EU’s members haven’t yet agreed on the mandate they will give the European Commission as regards negotiating a free-trade deal with the U.K. However, governments and Commission representatives had been largely consistent in the three years since the referendum that they would press for an extensive role for the ECJ in any FTA.

5. PMIs point to weak rebound

On an otherwise light day for data, purchasing managers indices across Europe showed the manufacturing sector still in contraction at the start of 2020, albeit apparently past the worst of last year’s slowdown.

The eurozone manufacturing PMI from IHS Markit rose to 47.9, a little higher than the 47.8 expected but still below the 50 line that separates growth from contraction. The U.K. PMI did make it back to 50 for the first time since May but the news was overshadowed by the post-Brexit tensions.

Top 5 Things to Know in the Market on Friday

2020-01-31 18:50:43

1. China to stay (mostly) shut next week on virus fears

The death toll from the novel coronavirus rose by the most in absolute terms yet, hitting 213, with over 9,800 cases confirmed. New countries reporting confirmed cases for the first time included Italy and the U.K. However, fatalities have still been completely restricted to China, and the majority of them are confined to the Hubei region where it broke out.

Even so, the impact on the Chinese economy is too big to be ignored. Factories in most of China’s industrial heartlands are due to stay shut for a second week when the New Year holiday season ends, hitting demand for commodities and disrupting global supply chains.

Goldman Sachs (NYSE:GS) analysts estimate that the outbreak will take some 0.4% off Chinese GDP growth this year.

2. Eurozone growth weakens, U.K. lending picks up to mark Brexit day

The euro zone’s economy grew at its slowest rate since the middle of 2014 at the end of last year, as both the French and Italian economies contracted under the influence of strikes against President Macron’s pension reforms and a sharp drop in inventories in Italy. A surprise drop in German retail sales at the end of the year also contributed to a mere 0.1% quarterly rise in eurozone output, while inflation also dipped in January due to lower prices for package tour holidays.

There was slightly better news on the other side of the English Channel, where U.K. mortgage lending rose at its highest rate since the referendum to leave the EU in 2016.

The pound stopped just shy of a seven-week high against the euro, before retracing to leave EUR/GBP at 0.8414.

3. Stocks set to open lower as headwinds strengthen

U.S. stocks are set to open markedly lower after weak economic data from the euro zone underlined the strength of the headwinds to growth against the backdrop of a spreading coronavirus.

Markets had rallied strongly into the close on Thursday after the World Health Organization chose not to recommend limitations on international transport, but appear likely to pare those gains at the open.

By 6:30 AM ET (1130 GMT), Dow 30 futures were down 142 points or 0.5%. The S&P futures and Nasdaq 100 futures were down in parallel.

The 10-year Treasury yield, which started the week around 1.75%, is on course to end it at 1.56% after riding a wave of risk aversion. It’s fractionally below the 3-month T-bill yield for the third day running.

4. Amazon's investments pay off; IBM's Rometty heads for exit (NASDAQ:AMZN) stock is set to open some 10% higher after the company reported blowout earnings for the holiday period after the closing bell on Thursday.

Earnings per share came in over 50% above consensus forecasts at $6.47, as the company’s heavy investment in one-day shipping reaped dividends in the most important months of the year.

Operating income at Amazon (NASDAQ:AMZN) Web Services continued to grow, albeit at a markedly slower rate, while its advertising business also churned out more profit. However, the international business lost money again, and sales at the physical stores division, which includes Whole Foods, fell 1%.

Elsewhere after the closing bell on Thursday, IBM (NYSE:IBM) announced that long-serving CEO Ginni Rometty will stand down to be succeeded by the head of the group’s cloud-computing division. IBM stock rose 4.6% in after-hours trading in response.

5. Impeachment trial set for speedy conclusion

President Donald Trump is on course for a speedy acquittal in his impeachment trial, after a key Republican Senator signalled he would vote against allowing new witnesses.

Sen. Lamar Alexander of Tennessee said via Twitter that, while he accepted the Democrats’ assertions that Trump had pressured Ukrainian President for political favors while withholding military aid that had already been approved by Congress, he didn’t see it as sufficient grounds for impeachment.

Alexander’s comments make it almost certain that former National Security Advisor John Bolton won’t be called upon to testify, an event that could have significantly increased pressure on Republican Senators to vote for impeachment.

Top 5 Things to Know in the Market on Thursday

2020-01-31 08:25:37

1. Coronavirus death toll rises as virus spreads further

China reported its biggest single-day jump in coronavirus deaths, the toll rising to 170 from 132 on Wednesday. The number of confirmed cases in China now stands at 7,711, up from 5,974 a day earlier.

The rate of growth in confirmed cases appears to be slowing to around 30% from 50% earlier in the week. Also, the fatality ratio remains well below that for the SARS epidemic, with only 2.2% of reported cases leading to death so far.

However, the disease continues to spread, with India reporting its first confirmed case. Elsewhere, Russia said it would close its (highly-porous) border with China. The World Health Organization is meeting again on Thursday to review its decision not to declare the outbreak a matter of global concern.

2. Q4 GDP reading to cast light on Fed inaction

The U.S. gets its first reading of gross domestic product in the fourth quarter of last year at 8:30 AM ET (1330 GMT).

Analysts expect the annualized rate of growth to have stayed at the relatively modest 2.1%, as the slowdown caused by trade conflicts with China and others continues to drag.

The update comes a day after the Federal Reserve gave little sign of easing monetary policy further in the near term, even though Chairman Jerome Powell reiterated that the central bank wasn’t happy with inflation still below target and remains alert to the risk of global disinflationary trends – trends that seem likely to be reinforced in the near term due to the impact of the coronavirus on the Chinese economy.

3. Stocks, oil tumble on virus fears again

U.S. stock markets are set to open sharply lower as the rising death toll from the coronavirus once again rattled confidence around the world, with participants also conscious that the Fed is not in any hurry to come and bail them out again.

By 6:30 AM ET (1130 GMT), Dow 30 futures were down 227 points or 0.8%, while S&P 500 futures were down 0.8% and Nasdaq 100 futures were down 0.7%.

That’s despite support from better-than-expected earnings late on Wednesday from large-caps Microsoft (NASDAQ:MSFT), Facebook (NASDAQ:FB), Mondelez (NASDAQ:MDLZ) and PayPal.

U.S. crude oil futures also suffered, falling below $52 a barrel for the first time in three months.

The earnings stream out of Europe was mixed on Thursday, with Royal Dutch Shell (LON:RDSa) stock hitting a three-year low after heavy writedowns and falling margins forced it to slow its mammoth buyback program. Deutsche Bank (DE:DBKGn), by contrast, beat expectations, although its numbers were flattered by windfall gains in bond trading.

4. Carney to cut before leaving Bank of England?

The Bank of England will decide at 7 AM ET (1200 GMT) whether or not to cut its own official interest rates, a day before the U.K. formally ends its 46-year membership of the European Union.

The decision is set to be a close one, with analysts polled by seeing a 6-3 vote in favor of keeping the bank’s key rate unchanged at 0.75%, despite a flurry of comments from policy-makers suggesting they were inclined to ease policy to shield it from a slowdown caused by Brexit uncertainty and the spillovers from the U.S.-China trade dispute.

Recent data – from house prices to the Markit Purchasing Managers’ Index – have produced more upside than downside surprises, which may incline the Monetary Policy Committee to wait until it sees the new government’s spending plans in March before taking the plunge.

The GBP/USD was rangebound around the $1.3000 level ahead of the decision, the last to be overseen by Governor Mark Carney before he departs.

5. Tesla's Q4 sets it up for surge to new record high

Tesla (NASDAQ:TSLA) stock is set to hit new records at the opening after surging 11% in after-hours trading on the back of a stronger-than-expected quarterly report.

CEO and founder Elon Musk predicted that deliveries will “comfortably exceed” 500,000 this year, an increase of 35%, and also said he expected positive profit and cash flow figures to be the rule, rather than the exception, in future.

Both revenue and profit beat expectations in the fourth quarter, although revenue grew only 2% and the profit margin fell as the higher-volume, lower-margin Model 3 increasingly dominated the sales mix.

Elsewhere on Thursday, the company said it had entered into a partnership with CATL and LG Chem , the biggest makers of electric vehicle batteries in China and South Korea, to supply batteries for its electric cars. It has so far depended on Japan’s Panasonic.

Top 5 Things to Know in the Market on Wednesday, 29th January

2020-01-29 17:55:41

1. Coronavirus death toll hits 132, as disruption to business spreads

The number of deaths from the novel coronavirus reached 132, while the number of confirmed cases hit 6,000. While the virus continues to spread, the relatively low apparent mortality rate (SARS killed nearly 10% of those it infected) has allowed a degree of relief to seep through to financial markets.

However, the dip in economic activity in China and further afield continues to take shape. Toyota suspended production in the country, while Starbucks (NASDAQ:SBUX) said it would close 2,000 branches temporarily, joining McDonald’s (NYSE:MCD) and KFC owner Yum! Brands (NYSE:YUM). The U.S. and Japan both started evacuating citizens from the country, while British Airways suspended all flights to China.

China’s transport ministry said overall trips during the current new year holiday season were down 7.2% on the year – a less dramatic decline than earlier figures had suggested.

2. Apple's blowout earnings

Apple (NASDAQ:AAPL) stock is expected to open at a new record high after results for the company’s first quarter of the current fiscal year came in well ahead of expectations. Strong sales of iPhones and its wireless AirPod earbuds, as well as higher revenue from its app store, all contributed.

Revenue rose 9% to $91.82 billion, also assisted by sales of wearables and streaming subscriptions. The company predicted revenue of $63-$67 billion in the current quarter – a wider range than usual due to the uncertainty created by the coronavirus outbreak. Apple has suppliers in Wuhan, where factories have pushed back their scheduled reopening date to Feb. 10, according to reports. In addition, the company faces a hit to retail sales in China, where it has cut store opening hours.

The support to the market from Apple’s earnings after the bell on Tuesday was slightly undermined by weaker-than-expected updates from chipmakers Xilinx (NASDAQ:XLNX) and Advanced Micro Devices (NASDAQ:AMD).

3. Earnings season hits its peak; with stocks set to open higher.

Earnings season is set to reach its peak, with reports due from – among others - Facebook, Tesla, General Electric, Mastercard, AT&T, Boeing, McDonald’s, Paypal, Mondelez, ADP , Southern, Anthem, Dow, Marathon, T. Rowe Price, Stanley Black & Decker and Archer Daniels Midland.

For now at least, U.S. stock markets are indicated to open higher, supported by the Apple update and by an easing of fears about the coronavirus impact.

By 6:25 AM ET (1125 GMT), Dow 30 futures were up 62 points or 0.2%, while S&P 500 futures were up 0.3% and Nasdaq 100 futures were up 0.4%.

European stock markets were all solidly higher, with strong updates from Banco Santander (MC:SAN) and pharma giant Novartis leading the way.

4. Fed seen on hold; comments on repo, virus likely to grab headlines

The Federal Reserve will announce the results of its monetary policy meeting at 2 PM ET, to be followed at 2:30 by Chairman Jerome Powell’s press conference.

The meeting is not a “live” one, in the sense that there are no expectations for any change interest rates. Instead, the focus is likely to be on what Powell says about the Fed’s balance sheet policy, and whether or when it expects to withdraw repo funding that was initially supposed just to ease the market over the year-end period, but which has since seemingly morphed into an unofficial relaunch of quantitative easing.

Powell’s comments on the impact of the coronavirus on the economic outlook will also be of interest.

5. GOP senators feel the heat

The impeachment trial of President Donald Trump may turn out not to be the foregone conclusion that everyone expected.

The Wall Street Journal reported late on Tuesday that Senate Majority Leader Mitch McConnell had told his colleagues he didn’t yet have enough votes to be sure of blocking Democrat demands for witnesses such as former National Security Advisor John Bolton to testify.

Bolton’s memoir reportedly contains first-hand accounts of Trump candidly explaining that he was withholding military aid to Ukraine - which had been authorized by Congress – pending the announcement of a criminal investigation into his political rivals.

Top 5 Things to Know in the Market on Tuesday, 28th January

2020-01-28 20:27:22

1. Mixed news on the coronavirus

The death toll from the novel coronavirus rose to 106, according to Chinese government data, while the number of confirmed cases rose to 4,515. Chinese authorities also reported 60 cases where patients had recovered, strengthening impressions that the virus may not be as lethal as the SARS virus was 17 years ago.

Restrictions on public life in China continue to point to a dip in economic activity, however. Hong Kong suspended ferry and rail services with the mainland, while Shanghai municipal authorities instructed factories to stay shut until Feb. 8. Other manufacturing centers have also taken similar measures.

The Chinese yuan touched a new low against the dollar earlier in the day but losses were more moderate than on Monday.

2. Apple's first earnings since launching streaming service

Apple (NASDAQ:AAPL) is set to report another record quarter for revenue from its growing services division when it posts its quarterly earnings after the closing bell, helped by the launch of its Apple TV streaming service in November.

Also of note will be Apple’s guidance on the smartphone market, which it has previously said will surge this year due to upgrades to 5G-supportive devices.

Analysts polled by expect the first quarter of Apple’s 2020 fiscal year to show earnings per share up 9% on the year at $4.54, on a 4.5% rise in revenue to $88.38 billion.

Services revenue – the key to Apple’s long-term outlook, given the increasing saturation of the global smartphone market, rose 17% in the 2019 fiscal year.

3. Stocks set to bounce after Monday horror show

U.S. stock markets are set to bounce at the open after their worst day in months on Monday. By 6:30 AM ET (1130 GMT), Dow 30 futures were up 62 points, or 0.2%, while S&P 500 Futures were up 0.2% and Nasdaq 100 futures were up 0.5%.

After the bell on Monday, Whirlpool (NYSE:WHR) stock and Juniper Networks (NYSE:JNPR) stock had both fallen in response to their respective quarterly updates.

In Europe, the recovery was a more mixed affair, with the German DAX and Dutch AEX both falling under the weight of disappointing updates from index heavyweights SAP (DE:SAPG) and Koninklijke Philips (AS:PHG). The benchmark Stoxx 600 fell 0.1%, while the U.K. FTSE rebounded a modest 0.1%.

4. Fed meeting starts; durable goods, consumer confidence data due

The Federal Reserve kicks off its two-day policy meeting against a backdrop of concerns for the world economy due to China’s measures to stop the spread of the coronavirus. Analysts expect the central bank to keep its official interest rates unchanged, despite fresh criticism last week from President Donald Trump.

The day’s economic data include the release of monthly durable goods orders at 8:30 AM ET and the Conference Board’s consumer confidence survey at 10 AM ET. There will also be regional business surveys from the Dallas and Richmond Feds.

5. ECB fails six banks in its annual capital review

The European Central Bank said that six banks fell short of their capital requirements in its latest supervisory review. That’s up from one a year ago.

The ECB also said it was concerned by the low profitability of many of the banks it monitored. Low interest rates, high operating costs and limited flexibility in cutting jobs mean that many banks are earning below their cost of capital, which limits their ability to issue fresh equity should they need to.

The ECB’s supervisory head Andrea Enria also warned that governance standards had slipped in the last year, and expressed concerns about operational risks.

Top 5 Things to Know in the Market on Monday, 27th January

2020-01-28 01:55:42

1. China’s economy faces a big hit from the coronavirus

Beijing extended the week-long New Year holiday by another three days to give authorities more time to screen for new cases of the virus. Officials said at the weekend that patients can be infectious for up to 14 days before their symptoms show, making it harder to stop its spread.

In addition to widespread cancellations of public transport and new year celebrations, the authorities have also closed down movie theaters, theme parks and other centers at what is normally the busiest time of the year. Tourist arrivals at Macau, the country’s gambling capital, were down 80% on the year, Bloomberg reported.

The number of confirmed cases has risen to 2,744 at the time of writing, of which 44 were outside China, according to World Health Organization officials cited by the BBC. Four were in the U.S. The number of deaths has risen to 80. Over the last week, both figures have been rising at around 50% a day.

Most analysts still expect GDP losses to be temporary rather than permanent, although they warn that spillovers to the global economy may be bigger than in the SARS epidemic in 2003, when China accounted for less of world GDP.

2. Oil, iron ore lead risk-off move in global markets

Crude oil prices continued to fall as the market priced in widespread demand destruction from China’s measures to stop the spread of the virus. Public transport has been curtailed in many cities, and China’s Transport Ministry said at the weekend overall transportation was down 29% at the start of the holiday season. Flight movements were down 42%.

By 6:20 AM ET (1120 GMT), U.S. crude futures were down 3.3% at $52.38 a barrel, their lowest in three months, while Brent futures were down 3.3% at $57.90.

There was no visible support from the flare-up in Iraq at the weekend, as the U.S. signalled it will strike back at Iranian-backed militias in the country after a rocket attack on the U.S. embassy in Baghdad.

Base metals prices also tumbled, reflecting the outlook for an extended shutdown of Chinese factories. Iron ore prices fell 6.5% in Asia, while Nickel futures fell 2.7% and copper futures fell 1.9% in London.

3. Stocks set to gap lower at opening

U.S. stocks are set for heavy losses at the opening, as downward momentum builds following the worst week since August for the S&P 500.

By 6:20 AM ET, Dow 30 futures were down 424 points or 1.5%, having earlier hit a new low for the year, while the S&P 500 futures contract was down 1.5% and the Nasdaq 100 contract was down 1.9%, both having hit three-week lows earlier. European markets were all down by over 1% after morning trading in Europe.

This week will be the busiest of the current earnings season, with all of the big tech names reporting. However, the week gets off to a relatively gentle start, with the roster being led by DR Horton, Sprint, Whirlpool and Arconic.

Elsewhere on the calendar, NY Fed President John Williams will speak at 9:30 AM ET but is unlikely to comment on monetary policy a day ahead of the Fed’s policy-making meeting. New home sales data for December are due at 10 AM.

4. Bolton drops Trump bombshell, but not in Congress

John Bolton, President Donald Trump’s Former National Security advisor, let it be known that Trump had told him he wanted to freeze military aid for Ukraine, already approved by Congress, until President Volodymyr Zelensky announced a criminal investigation into the son of Joe Biden.

Biden Sr. is Trump’s likeliest opponent in the presidential election later this year.

The claim, first reported by the New York Times, emerged from a draft of Bolton’s memoir circulating in Washington, and adds to the body of evidence tying Trump directly to the withholding of aid from a U.S. ally for personal gain.

However, it is far from certain that the claim will be admitted as evidence in Trump’s ongoing impeachment trial in the Senate. It is not even clear that Bolton will be called on to testify, given the trial rules laid out by Republican Senators last week.

5. Italian bonds leap as Salvini thwarted

Italian government bonds and bank stocks leaped after a stinging defeat for the right-wing alliance led by Matteo Salvini’s Lega party in regional elections at the weekend.

Despite an intense and expensive campaign, the Lega failed to wrest control of the region of Emilia Romagna from an alliance led by the center-left Democratic Party. The result slows the momentum of a party that has promised a more expansionary fiscal policy, risking a confrontation with the rest of the euro zone.

The yield on the Italian 10-year benchmark fell 18 basis points, while the spread between it and its German counterpart tightened by 15 basis points to 142, its lowest in nearly three months.

The rally also enabled Italian bank stocks to escape the general rout in stock markets.

Economic Calendar - Top 5 Things to Watch This Week

2020-01-26 20:40:47

1. Coronavirus outbreak
Market participants are keeping a wary eye on developments surrounding the coronavirus outbreak which has infected more than 2,000 people, the vast majority in China where 56 people have died. The virus has also spread to the U.S., Thailand, South Korea, Japan, Australia, France and Canada.

With stocks close to all-time highs investors are fearful that the newly identified virus could develop into something worse, like the 2003 SARS epidemic.

"Markets hate uncertainty and the virus has been enough to inject uncertainty in the markets," said David Carter, chief investment officer at Lenox Wealth Advisors in New York.

The World Health Organization has stopped short of calling the outbreak a global health emergency, but some health experts question whether China can continue to contain the epidemic.

2. More FAANG results
While last week’s Q4 earnings from Netflix (NASDAQ:NFLX) underwhelmed Wall Street, analyst hopes are still high for the other FAANGs - Facebook (NASDAQ:FB), Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN) and Google parent Alphabet (NASDAQ:GOOGL) - ahead of their financial results for the quarter.

The FAANG group of U.S. tech stocks have been the biggest drivers of the bull market, with recent gains among most of the group far outstripping the broader market.

Facebook is expected to post earnings growth of 6.2% when it reports on Wednesday, while Apple earnings, due a day earlier, are forecast to have grown 8.7%. Amazon has warned that increased investment in its package delivery business in the last quarter will weigh on earnings, but it sees quarterly revenues up 18.7% when it reports on Thursday.

In comparison, the S&P 500's fourth-quarter earnings are expected to decline 0.8% and revenue is seen rising 4.4%, according the latest estimates compiled by Refinitiv.

3. Fed meeting
The Fed will almost certainly keep monetary policy on hold on Wednesday as policymakers continue to assess how the three rate cuts from 2019 are percolating through the economy.

"With no new forecasts being released at this meeting it will be the tone of Jerome Powell’s press conference and the actual vote that is likely to be of most interest for markets," said James Knightley, chief international economist at ING.

"We would also expect to hear Jerome Powell retaining his cautiously upbeat language, particularly given the positive conclusion to U.S.-China trade talks. He is likely to reiterate that we will need to see a “material change” for the Fed to consider a policy shift."

4. Bank of England meeting
The BoE is to deliver its final monetary policy decision before Britain exits the EU on Jan 31 on Thursday and the meeting will be Mark Carney's last as central bank governor.

The question is whether the BoE will join central bank peers in cutting interest rates. Economic growth and inflation took a hit from three-and-a-half years of Brexit uncertainty so a recent string of dismal data and comments by BoE officials, including Carney, that more economic stimulus might be needed saw rate cut expectations surge.

But economic data last week pointed to a post-election boost, leading markets to pare back expectations for a cut.

The future path of the British pound, currently trading at around $1.31, in the middle of its trading range so far in 2020 – hangs on the BoE's decision and forecasts for whether the economy will find more momentum after Brexit.

5. GDP figures
The U.S. is to release advance fourth quarter GDP figures on Thursday, with analysts forecasting growth of 2.1%. U.S. President Donald Trump might repeat his argument that if it were not for Fed policy tightening, growth would be closer to 4%.

The Euro Zone is to release GDP data on Friday, which is forecast to show the economy expanded 0.2% from the previous three months, backing up the European Central Bank’s view of “ongoing, but moderate growth.”

Top 5 Things to Know in the Market on Friday, 24th January

2020-01-24 15:27:08

1. A clear and present risk to Chinese growth, but not a global emergency

The official death toll from the coronavirus rose to 25, although the World Health Organization continued to designate the outbreak as a matter of local, rather than global, concern. Most of the victims so far have been elderly, according to various. The youngest confirmed victim was 36 years old.

A total of 10 Chinese cities have now put restrictions on travel, although with the disease now being confirmed in 32 of 34 Chinese provinces, the virus has already spread thoroughly throughout the country.

A much larger number of cities have curbed public ceremonies to celebrate the lunar new year and closed centers such as movie theaters, creating a clear risk to demand and growth in a week that is China’s most important holiday. Standard & Poor’s Ratings Group estimates that a major epidemic could take as much as 1.2 percentage points off growth this year.

2. PMIs show improvement in Germany, U.K., but drags elsewhere

The euro zone can’t catch a break. Just as its biggest economy, Germany, showed signs of pulling out of the funk it’s been in for the last 18 months, strikes in France and – apparently – slowdowns in Italy and Spain mean that the region only showed “muted” growth at the start of the year.

That’s the takeaway from the ‘flash’ purchasing managers indices posted by IHS Markit, which showed the composite eurozone index stuck at 50.9 in January. German manufacturing, traditionally the continent’s most reliable growth engine, posted the smallest contraction since June last year, with an index reading of 45.2.

By contrast, the debate over an interest rate cut from the Bank of England got even muddier after the composite PMI rebounded to 52.4, its highest level since May – albeit at 49.8, manufacturing was still below the 50 mark that would signify growth.

Both GBP/USD and EUR/USD fell slightly on the back of the releases, pushing the dollar index to a seven-week high.

3. Stocks set to open higher as virus fears recede

U.S. stock markets are set to advance again at the opening Friday, after shaking off a mixed bag of results on Thursday that ended on a bright note from Intel (NASDAQ:INTC) (see below).

By 6:20 AM ET (1120 GMT), Dow futures were up 66 points, or 0.2%, while S&P 500 Futures were up 0.2% and Nasdaq 100 futures were up 0.3%.

European markets overnight turned sharply higher, with the benchmark Stoxx 600 rising 1.2% and the U.K. FTSE 100 rising 1.6% as fears about the scale of the coronavirus eased, while the PMIs in the U.K. and Germany bolstered sentiment. Chinese markets are now shut for the week-long national holiday.

4. Intel's figures bolstered by data center growth

Intel stock rose 6% in after-hours trading after the company reported better-than-expected sales and earnings for the three months through December, thanks mainly to the continued increase in demand for chips from data centers that power Cloud-based servers.

Another boost came from a 2% rise in sales at the PC division, due largely to an surge in demand for newer PCs as Microsoft’s decision to end support for Windows 7 led to an increase in upgrades to newer models.

The results added to strong reports from Taiwan Semiconductor and STMicroelectronics this week, CEO Bob Swan said the company was performing above its medium-term targets but warned that supply was “tight”, which some interpreted as an admission that the company was vulnerable to losing further ground to competitors.

5. Talk of more crude output cuts grows

Crude oil continued to struggle amid fears that the coronavirus will hit Chinese demand. U.S. crude futures fell 0.6% to $55.27 a barrel, while Brent futures fell 0.6% to $61.64.

The slump in prices in the last couple of days has prompted some active jawboning from major producers, with officials from Saudi Arabia and elsewhere talking up the possibility of extending and deepening production cuts that have been agreed through March.

The Russian news agency Tass reported unidentified sources earlier that an extension of the current deal through the end of 2020 was under discussion, while a review of countries’ individual quotas may take place in June.

After the close, Baker Hughes will update the market with its latest numbers on active drilling rigs. The company gave a bleak outlook for its U.S. land-based business earlier this week as it presented its quarterly number.

Top 5 Things to Know in the Market on Thursday, 23rd January

2020-01-23 12:31:38

1. China in lockdown as virus spreads

China put a second city in lockdown in its attempts to combat the spread of the coronavirus.

Having shut down public transportation in and out of Wuhan, the origin of the outbreak, on Wednesday, the authorities announced Thursday that it will stop trains and buses leaving Huanggang, a city of 7.5 million people around 45 miles further east. Local authorities said they would also close a central market, as well as movie theaters, internet cafes and other cultural and entertainment centers.

The move comes just ahead of the week-long Lunar New Year holidays, which is peak travel season in China. The Communist Party’s People’s Daily puts the running death toll now at 17, while other reports put the number as high as 25. The number of confirmed cases continues to rise, with more cases being reported in China’s megacities further east, such as Beijing, Shanghai and Zhejiang.

The World Health Organization has still not designated the outbreak a matter for international concern. For context, nearly 80,000 people in the U.S. died of more common strains of influenza in 2018.

2. Global stocks steady after Chinese buffeting

Chinese stocks tumbled in response to the authorities’ actions on Thursday, with the tech-focused SZSE Component index falling 3.5%, and the blue-chip China A50 index falling 2.9%. The sell-off was accelerated by those looking to lock out risk ahead of the week-long holiday next week.

However, European stocks recovered after an initial wobble, helped by strong earnings from companies as diverse as French chipmaker STMicroelectronics and U.K. online fashion retailer Asos.

By 6:30 AM ET (1130 GMT), Dow futures were effectively flat, down less than 10 points, while the S&P 500 Futures contract was up less than 0.1%. The Nasdaq 100 futures contract was a tad over 0.1% higher.

Demand for haven assets was mixed, with U.S. Treasury bond yields falling by between one and three basis points. Gold futures remained stuck in narrow range above $1,550 a troy ounce.

3. Oil tumbles as virus compounds oversupply fears; EIA stocks data due

Oil prices tumbled to their lowest in seven weeks, as fears about the impact of the virus on Chinese demand continued to dominate.

By 6:30 AM ET, U.S. crude futures were down 1.5% at $55.87 a barrel, having earlier hit an intraday low of $55.59, its lowest since Dec. 2. Brent futures were down 1.3% at $62.38 a barrel.

An extra drag came from data released on Wednesday showing a 1.6 million barrel increase in U.S. crude stocks, the second week in a row that supplies had risen amidst expectation of a drop. The American Petroleum Institut figures, which point to another nascent glut on the domestic market, may or may not be corroborated by official government data due at 10:30 AM ET (1530 GMT).

4. Lagarde to launch ECB policy review

Christine Lagarde is due to set out the parameters of her review of the European Central Bank’s monetary policy after the bank’s regular policy-making council meeting. Lagarde’s press conference is due at 8:30 AM ET (1330 GMT).

There are no expectations of any change either to the ECB’s interest rates, asset purchase program or forward guidance. The market’s focus will consequently be on how Lagarde seeks to redefine the bank’s agenda. Speculation has bubbled recently that she may use the review to row back on Mario Draghi’s commitment to ease policy further if need be, fearing the risks to the financial sector that that would entail.

5. Intel (NASDAQ:INTC), P&G, Comcast (NASDAQ:CMCSA) headline earnings roster

The day’s earnings parade begins with consumer product giant Procter & Gamble and will be bookended by chipmaker Intel (NASDAQ:INTC) and broadcaster Comcast (NASDAQ:CMCSA).

Intel’s figures will be scrutinized for any read-across for the rest of achip sector which had a rough 2019 but is expected to rebound strongly this year. Comcast's will be of interest chiefly because of what it says about its planned streaming service Peacock, which will follow hot on the heels of signs that Netflix (NASDAQ:NFLX) is starting to struggle with competition in the U.S. market.

After the close on Wednesday, Texas Instruments (NASDAQ:TXN) had fallen 0.6% and brokerage and advisory firm Raymond James fell 4.3% after disappointing quarterly updates.

Top 5 Things to Know in the Market on Wednesday, 22nd January

2020-01-22 14:38:18

1. Trump revives trade threats

President Donald Trump revived the threat of a trade war with the European Union, with a fresh threat to levy tariffs on European auto exports if the EU fails to agree to a “new deal”. He didn’t specify what that new deal would entail, other than complaining about the size of the EU’s surplus with the U.S. (which he exaggerated).

Trump told CNBC that in his meeting with new EU Commission President Ursula von der Leyen on Tuesday, he had said that in the absence of a new deal, he would “take action” in the form of “very high tariffs on their cars and other things.”

The comments expose the persistent divisions between the two, which were papered over at the weekend by reports talking up an informal truce until next year. French sources suggested that France had agreed to suspend its plans for a digital services tax, which would largely have hit U.S. tech giants, until next year.

2. China reassures on coronavirus

China’s National Health Commission said the number of confirmed fatalities from the coronavirus had risen to nine, while the number of confirmed cases had risen to 440. However, global stock markets were taking a more relaxed view of the outbreak on Wednesday: Chinese stocks rose across the board after reassurances of transparency from the country’s authorities regarding the outbreak's progress.

Late on Tuesday, the U.S. Center for Disease Control had confirmed the first case of the disease in the U.S., in Washington state.

The outbreak is happening just before the Lunar new year holiday, typically the peak season for travel in China. That has raised fears that the pneumonia-like virus, which appears to have originated in the central Chinese city of Wuhan, will spread throughout the country and region.

3. Netflix’s leaky bucket

Netflix (NASDAQ:NFLX) pulled in 8.3 million new subscribers in foreign markets in the last quarter of the year, far more than either it or Wall Street expected. The numbers reflect the continuing potential to grow by raising penetration in overseas markets.

Revenue rose 30%, a fraction more than expected, while earnings were flattered by a one-off tax gain.

The less good news was that it missed its forecasts for U.S. subscriber growth for the third quarter in a row, evidence of increasing pressure from competing streaming services such as Disney+. Given that those rivals are set to follow Netflix’s international expansion in due course, the onus will be on Netflix (NASDAQ:NFLX) to prove that it can defend its first-mover advantage. Netflix stock rose 2.3% in after-hours trading.

4. Stocks set to open higher

U.S. stock markets are set to open clearly higher on Wednesday in the wake of reassuring updates not only from Netflix (NASDAQ:NFLX) but IBM (NYSE:IBM) too, which finally reported a quarterly rise in revenue after 20 straight declines. The news gave some hope that the acquisition of Red Hat last year will accelerate the company’s reinvention as a cloud-based service provider.

By 6:20 AM ET (1120 GMT), Dow futures were up 83 points, or 0.3%, while S&P 500 futures were up 0.4% and Nasdaq 100 futures were up 0.6%. Dow 30 futures were underperforming after Boeing (NYSE:BA) once again pushed back its timeline for delivering the 737 MAX to its increasingly frustrated customers. Airbus (OTC:EADSY) stock hit a new record high.

Johnson & Johnson leads the day’s earnings roster, with updates from Raymond James, Amphenol (NYSE:APH) and Baker Hughes also due.

5. King dollar extends its reign; Canadian rate meeting eyed

The dollar continued to hold close to its highest in over a month, profiting from the relative strength of the U.S. economy amid persistent uncertainties over the outlook in China.

The greenback may get a further boost if the Bank of Canada surprises with an interest rate cut or guidance thereof when it holds its policy meeting later. Canadian inflation data ahead of the decision may give an important clue.

In the U.S., the day’s data releases will be concentrated in the housing sector, with updates on mortgage applications, house prices, and existing home sales in the course of the New York morning.

Top 5 Things to Know in the Market on Tuesday, 21st January

2020-01-22 09:47:56

1. Impeachment trial starts in U.S. Senate

The trial of President Donald Trump in the Senate starts in earnest on Tuesday amid heated controversy about the rules laid out by the majority Republican Party.

Procedural rules set out by Senate Majority Leader Mitch McConnell restrict the time allowed to set out the case against Trump and make it all but certain that no witnesses will be called to give evidence, while also raising the bar for admitting evidence already provided by the House of Representatives’ impeachment proceedings.

The President is accused of abusing his office by withholding military aid for Ukraine approved by Congress, while pressuring Ukrainian President Volodymyr Zelensky to initiate criminal investigations into the son of former Vice-President Joe Biden. Biden is the front-runner for the Democratic nomination in this year’s election campaign.

2. Trump vs. Thunberg in Davos

Trump himself, meanwhile, is thousands of miles away at the World Economic Forum, the gab-fest of choice for the world’s business elite.

Trump's speech was a characteristically hyperbolic recital of his own administration's achievements ("an economic boom the like of which has never been seen before"), with some notable swipes at the Federal Reserve ("They raised rates too fast, and they cut them too slowly") and - although he didn't mention her by name, the teenage environmental activist Greta Thunberg, who had addressed the forum just before him.

Thunberg criticized her audience for having done nothing of substance to address Climate Change despite years of lip-service. Trump described climate activists as the successors to medieval prophets of doom, calling them closet Socialists who desire nothing more than personal power.

Environmental issues are enjoying a prominent place in this year’s WEF agenda, after a 2019 that was the hottest year on record for the world’s oceans and the second-hottest year for global average temperatures, as well as being marked by a host of extreme weather events such as the typhoons that hit Japan, and wildfires in Australia, Russia, the U.S. and Brazil.

3. Stocks hit by Asian epidemic fears

A wave of risk aversion hit global stock markets as the spread of a pneumonia-like virus across China triggered concerns about Chinese growth, while a Moody’s downgrade of Hong Kong’s credit rating also continued to weigh on sentiment.

The so-called coronavirus has now claimed four lives, with hundreds more confirmed cases across the country, raising fears of a rerun of the SARS epidemic nearly 20 years ago. Authorities have confirmed that the disease can be transmitted from person-to-person.

By 6:30 AM ET (1130 GMT), Dow futures were down 78 points, or 0.3%, while S&P 500 Futures were down 0.4% and Nasdaq 100 futures were down 0.5%.

Earlier, Chinese stock indices had fallen by between 1.4% and 2.0%, while the Euro Stoxx 50 fell 0.8% and the U.K. FTSE 100 fell 1.2%.

4. Brighter data out of Europe hit U.K. rate cut chances

The case for an interest rate cut in the U.K. received a blow from stronger-than-expected labor market data. The Office for National Statistics reported a 208,000 rise in employment in the three months through November, almost twice the consensus estimate.

Sterling rose as much as 0.3% on the news but failed to break out of the downward trend it’s been in since the initial euphoria at Boris Johnson’s election victory started to fade in mid-December.

There was also brighter news from Germany, where the ZEW survey of investor sentiment hit its highest level in over four years in January. That follows a report from Germany’s Bundesbank on Monday which suggested that the key manufacturing sector could bottom out early this year.

The euro rose above $1.1100 for the first time since Friday in response.

5. Netflix's earnings in spotlight after UBS disappointment

Netflix will report its figures for the three months through December after the close, an update that will show what shape the company is in as the streaming wars kick off in earnest this year.

Analysts polled by predict earnings per share of 52 cents on revenue of $5.45 billion.

Also, IBM will release its latest quarterly results, hoping for a return to break a years-long trend of declining revenue.

Earlier, Swiss banking giant UBS Group (NYSE:UBS) missed estimates with its fourth-quarter and 2019 results, setting itself a lower set of medium-term targets against a backdrop of persistent low interest rates.

Top 5 Things to Know in the Market on Monday, 20th January

2020-01-20 12:25:56

1. Oil prices spike on Libyan, Iraqi moves

Oil prices advanced but gave up most of their weekend gains after unrest hit production in Iraq and Libya.

Security guards shut down production at the 70,000 barrel a day Al Ahdab field at the weekend in a protest demanding permanent employment contracts. There where also anti-government protests further afield, and other protests that closed down the border with Iran in protest at Iranian influence in the country, according to reports.

Unrest in Iraq has the capacity to disrupt far bigger oil flows than Libya, given that it is the second-biggest producer in OPEC with daily output of over 4.5 million barrels a day. However, it is Libya where geopolitics are having the biggest immediate impact. Russian-backed warlord Khalifa Haftar was reported to be on the verge of shutting down the country’s largest field, Sharara, with a capacity of 300,000 b/d, in an effort to keep up the pressure on UN-recognized Prime Minister Fayez al Sarraj, as the parties thrash out the details of a peace plan.

By 6:20 AM ET (1120 GMT), U.S. crude futures were at $58.88 a barrel, up 0.5%, while Brent was up 0.7% at $65.29.

2. IMF to release updated global forecasts

The International Monetary Fund is due to release its latest forecasts for global growth at 8 AM ET (1300 GMT) as business and world leaders descend on Davos for this year’s World Economic Forum.

The IMF spent most of last year cutting its growth forecasts under the pressure of global trade conflicts and the prospect of a disorderly Brexit. Its forecast of 3.0% growth for 2019 was the lowest in a decade. In its latest update, the Fund said it expected world GDP growth to rebound to 3.4%. That was conditional on the avoidance of a disorderly Brexit and of any further escalation to the U.S.-China trade conflict. With both of those conditions –- for now –- in place, the risk of further downgrades looks to have been reduced.

3. U.K. house prices bounce

The U.K. economy produced its first sign of a return of optimism after the general election in December settled the country’s near-term political direction, lifting at least some of the many uncertainties that had hobbled it in 2019.

Online realtor Rightmove said house prices had increased 2.3% on the month to an average of 306,810 pounds ($400,000). In London, they were up 2.1% from December, signalling a break from a downtrend that has been in place since the U.K. voted to leave the EU in 2016. Both upswings were the largest for any January since Rightmove began compiling its index 18 years ago.

“There now seems to be a release of this pent-up demand,” said Rightmove Director Miles Shipside. “While there may well be more twists and turns to come in the Brexit saga, there is now an opportunity for sellers to get their property on the market for a spring move unaffected by Brexit deadlines.”

4. China on virus alert ahead of New Year holiday

A pneumonia-like virus spread in China, with the number of active cases tripling and reported incidents coming from an increasing number of major towns, including the capital Beijing.

Chinese authorities have now confirmed three fatalities, while the government of the central Chinese city of Wuhan, where the newly discovered coronavirus appears to have originated, said the number of infected patients had leaped from 62 on Sunday to 198 as of Monday.

The outbreak comes at a time when tens of millions of Chinese are planning to travel internally for the Lunar New Year holiday.

5. Palladium goes from strength to strength

Palladium futures hit a new record high of over $2,300 an ounce amid a sustained and increasingly frantic quest for the metal from automotive groups fearing supply disruptions in South Africa, the world’s biggest producer.

Chronic problems with power supply due to the parlous state of national electricity monopoly Eskom have put huge questions marks over the ability of mines to continue operating.

Palladium is in a “real sweet spot” of recovering industrial production, Bloomberg quoted UBS Wealth Management’s executive director for commodities Wayne Gordon as saying. He pointed to improving demand due to strong car sales as well as the looming supply constraints.

The collapse in sales of diesel-powered cars has prompted increased demand for palladium, which is used in catalytic converters for gasoline-powered vehicles.

By 8:20 AM ET, palladium futures had retraced slightly to $2,280.90 an ounce, up 2.5% on the day.