TradeTheNews.com Weekly
Market Update: Market rebound pauses to assess weaker data and progress on
trade and other macro issues
Fri, 08 Feb 2019 16:08 PM EST
US indices opened to week supported by renewed buying vigor coming on the heels
of the strong January jobs report. US/China trade hopes were also lifted as it
became clear US officials were indeed set to travel to Beijing next week. Stock
markets lost momentum though as investors continued to sift through a barrage
of corporate earnings reports and as the furious five-week long rebound in
equities ran up against resistance near 200-day moving averages. Global growth
worries were amplified by continued softness in the economic data, particularly
in Europe which coincided with the European Commission decision to slash
economic growth forecasts for the region. Potentially adding the growth jitters
were a series of communications from central banks, that in some cases, were
unexpectedly dovish in the wake of similar posturing by the Fed and ECB last
week. Risk flows turned decidedly defensive through the final two trading
sessions, helped in part by US officials tempering expectations ahead of next
week’s trade talks in Beijing. Government bond yields pushed lower globally.
The 10-year Bund fell back below 0.1% and the Gilt to 1.15% for the first time
since May. LIBOR followed up its largest daily drop since 2009 on Thursday by
resetting lower once again on Friday. The US 30-year traded sub 3.00%. For the
week, the S&P rose less than 0.1%, the DJIA added 0.2%, and the Nasdaq
gained 0.5%.
On the corporate news front this week, the earnings season peaked, highlighted
by reports from GM and Google parent Alphabet. GM impressed the market by
beating estimates on both the top and bottom line, though sales in Asia showed
some signs of slowing. Alphabet also beat expectations but some analysts
fretted over weaker operating margins and rising costs at the search giant. In
M&A news, the cloud sector was bolstered by the announcement that Ultimate
Software would be acquired by an investor group led by Hellman &
Friedman for about $11 billion. Meanwhile, BB&T announced a combination
with SunTrust, a $66 billion transaction that would mark the largest banking
merger since the financial crisis. Shares of Arconic slid into the end of the
week as it further confirmed it will not pursue a sale, instead focusing on
costs cuts including a dividend reduction.
MONDAY 2/4
*(EU) EURO ZONE FEB SENTIX INVESTOR CONFIDENCE: -3.7 V -1.3E (lowest since Nov
2014)
ULTI To be acquired by an investor group led by Hellman & Friedman
for $331.50/share valued at ~$11B (going private)
*(US) NOV FINAL DURABLE GOODS ORDERS: 0.7% V 1.5%E; DURABLES EX-TRANSPORTATION:
-0.4% V 0.0%E
GOOGL Reports Q4 $12.77 v $11.08e, Rev $31.8B (ex $7.4B TAC) v $31.3Be
*(AU) RBA LEAVES CASH RATE TARGET UNCHANGED AT 1.50%; AS EXPECTED
TUESDAY 2/5
BP.UK Reports Q4 adj Net $3.48B v $2.64Be, Rev $75.7B v$60.7Be
*(UK) JAN SERVICES PMI: 50.1 V 51.0E (30th month of expansion but lowest since
July 2016)
(EU) ECB Policymakers reportedly hesitant to change interest rate guidance as
it would impact term of next ECB president - press
*(US) JAN ISM NON-MANUFACTURING INDEX: 56.7 V 57.1E
(RU) Reportedly Saudi Arabia and other Persian Gulf nations seeking to
formalize partnership with Russia on oil production - press
SNAP Reports Q4 -$0.13 v -$0.08e, Rev $390M v $378Me
7203.JP Toyota reports 9M Net ¥1.42T v ¥2.01T y/y; Op ¥1.94T v ¥1.77T
y/y; Rev ¥22.48T v ¥21.80T y/y
WEDNESDAY 2/6
ALO.FR EU rejects Alstom-Siemens rail merger (as speculated)
GM Reports Q4 $1.43 adj v $1.21e, Rev $38.4B v $37.0Be
(US) Q3 Nonfarm Productivity revised lower from 2.3% to 2.2%; Q4 data postponed
(IT) IMF sees Italy growth below 1% in 2019 and 2020; notes government strategy
could leave them vulnerabl
*(BR) BRAZIL CENTRAL BANK (BCB) LEAVES SELIC TARGET RATE UNCHANGED AT 6.50%; AS
EXPECTED
THURSDAY 2/7
*(IN) INDIA CENTRAL BANK (RBI) CUTS REPURCHASE RATE BY 25BPS TO 6.25%; NOT
EXPECTED
SAN.FR Reports Q4 Business EPS €1.10 v €1.06 y/y; Business Net €1.36B v
€1.40Be, Rev €9.0B v €9.04Be
*(DE) GERMANY DEC INDUSTRIAL PRODUCTION M/M: -0.4% V 0.8%E; Y/Y: -3.9% V -3.4%E
*(EU) ECB ECONOMIC BULLETIN: Incoming information has surprise to the downside;
economic indicators signal a moderation in global growth momentum (in-line with
Draghi press conference)
(EU) EU Commission Winter Economic Forecasts: Cuts EU-19 GDP from 1.9% to 1.3%
STI To combine with BB&T in all-stock deal valued at ~$66B
*(UK) BOE LEAVES INTEREST RATES UNCHANGED AT 0.75%; AS EXPECTED
*(UK) BANK OF ENGLAND (BOE) FEB MINUTES: VOTED 9-0 TO LEAVE INTEREST RATES
UNCHANGED AT 0.75%
TWTR Reports Q4 $0.31 v $0.25e, Rev $909M v $873Me; will discontinue
disclosing MAU after Q1'19
(EU) EU's Donald Tusk: No Brexit break through in sight, talks to continue
(US) Pres Trump confirms he will not meet with Xi before the March 1 tariff
deadline; may meet later
*(US) DEC CONSUMER CREDIT: $16.6B V $17.0BE
HUAWEI.CN Trump likely to sign order banning Chinese telecom equipment
next week - US press
*(AU) RESERVE BANK OF AUSTRALIA (RBA) QUARTERLY STATEMENT ON MONETARY POLICY
(SOMP): REITERATES INTEREST RATE OUTLOOK MORE EVENLY BALANCED THAN PREVIOUSLY
THOUGHT
FRIDAY 2/8
*(RU) RUSSIA CENTRAL BANK (CBR) LEAVES KEY 1-WEEK AUCTION RATE UNCHANGED AT
7.75%; AS EXPECTED
ARNC Reports Q4 $0.33 v $0.30e, Rev $3.47B v $3.41Be; issues strategy
update to cut costs, cut dividend, buyback $500M in shares
AMZN Said to reconsider NYC as second headquarters site - press
