Weekly Market Update: Markets see ‘red’ Chinese New Year amid coronavirus fears
Fri, 24 Jan 04:22 PM EST/09:22 PM GMT
The cloud of the spreading coronavirus cast a pall over trading this week. Investors became somewhat unnerved upon confirmation of the virus spreading across every province of China and beyond its borders. By Friday three cases were confirmed in the United States and Chinese officials had quarantined over a dozen cities and begun instituting travel restrictions heading in the key Lunar New Year holiday, normally China’s busiest travel season. Separately, President Trump traveled Davos touting his administrations’ economic accomplishments even as the impeachment trial commenced in the Senate. Trump also reached a deal with French President Macron to postpone any digital tax at least for the remainder of 2020 as they discuss a trade deal. The ECB, Bank of Japan, and the Bank of Canada all left rates unchanged as expected, and the ECB also provided details of its ongoing strategic review under the stewardship of President Lagarde. European manufacturing readings showed real improvement topping expectations buoying hope that growth in that region has turned the corner. Interest rates slipped lower and the US Treasury curve flattened, helped by demand for safe haven assets. Oil prices and other commodities saw selling pressure amidst the never-ending barrage of coronavirus reports. WTI crude slipped to levels not since October and some investors noted it was accompanied by widening spreads in portions of the high yield bond market. Thanks to Friday’s selloff, the S&P ended down 1% for the week, while the DJIA slipped 1.2% and the Nasdaq lost 0.8%.
Earnings reports this week were highlighted by a number of major technology names. Intel shares popped to a nearly two-decade high after posting big top and bottom line beats, citing good data center demand, and issuing strong guidance. Netflix subscription numbers beat along with earnings, but investors took profits as competition multiplies. IBM topped estimates and reported strong EPS and revenue numbers as some investors saw signs of a turnaround for the tech giant. Citrix reported beats and raised guidance as its transition to a subscription-based model seems to be progressing smoothly. Boeing announced that it doesn’t expect regulators to sign off on the return of the 737 MAX until June or July, which would be months later than the manufacturer previously estimated.
SUNDAY 1/19
(CN) China Ministry of Industry and Information Technology (MIIT) Official Miao Wei: Studying postponing the reduction of subsidies for new energy vehicles (NEVs)*; China faces big pressure in stabilizing industrial production this year
MONDAY 1/20
(US) President Trump and France President Macron agree to continue discussions regarding digital tax through the remainder of 2020 - press
(CN) China city of Wuhan reports 4th death from pulmonary coronavirus; Beijing confirms human-to-human transmission; China Pres Xi: Party committees, governments and relevant departments at all levels should put people’s lives and health first.
*(JP) BANK OF JAPAN (BOJ) LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED AT -0.10%; AS EXPECTED
TUESDAY 1/21
UBSG.CH Reports Q4 Net $722M v $682Me, Adj Pretax $1.2B v $478M y/y; Rev $7.05B v $6.97B y/y; To buyback $450M in shares in H1
*(DE) GERMANY JAN ZEW CURRENT SITUATION SURVEY: -9.5 V -13.5E; EXPECTATIONS SURVEY: 26.7 V 15.0E (highest since 2015)
(US) US President Trump: US in the midst of a economic boom; recent trade deals represent new model - Davos speech
(US) CNN producer: CDC expected to report this afternoon that the first case of Wuhan coronavirus in the US has been discovered in Washington state
BA CNBC: Boeing doesn’t expect regulators to sign off on 737 Max until June or July, months later than the manufacturer previously expected
IBM Reports Q4 $4.71 v $4.69e, Rev $21.8B v $21.7Be
*(KR) SOUTH KOREA Q4 PRELIMINARY GDP Q/Q: 1.2% V 0.7%E (fastest pace since Q3 2017); Y/Y: 2.2% V 1.9%E
WEDNESDAY 1/22
*(CA) BANK OF CANADA (BOC) LEAVES INTEREST RATES UNCHANGED 1.75%; AS EXPECTED
AER CEO: there is No alternative to the 737MAX, and airlines want more of these aircraft - press
(US) Association of American Railroads weekly rail traffic report for week ending Jan 18th: 499.7K, -8% y/y
BA CEO: Expects 737 MAX production will resume months before return to service in midyear; no discussions about cutting dividend
(CN) Wuhan bus, metro, ferry and passenger service have suspended operations from Jan 23rd to address China coronavirus outbreak; recovery time will be announced separately - China state media
TXN Reports Q4 $1.12 v $1.02e, Rev $3.35B v $3.22Be
(CN) China confirms 571 cases of new Coronavirus v 473 reported ~13 hours ago - China Press
*(AU) AUSTRALIA DEC EMPLOYMENT CHANGE: +28.9K V +10.0KE; UNEMPLOYMENT RATE: 5.1% V 5.2%E (9-month low for jobless rate)
THURSDAY 1/23
PG Reports Q2 $1.42 v $1.37e, Rev $18.2B v $18.3Be
*(EU) ECB LEAVES MAIN 7-DAY REFINANCING RATE UNCHANGED AT 0.00%; AS EXPECTED; formally announces Strategic Review (as expected)
(EU) ECB's Lagarde: Strategic Review to look at a host of issues and how to deliver price stability - Q&A
(CN) China Xinhua: Total coronavirus cases at 830 vs 639 prior*; death toll now at 25 as of Jan 23; At least 2 deaths have been confirmed outside of the Hubei province
FRIDAY 1/24
(EU) ECB's Lagarde: ECB policy is not on autopilot during Strategic Review
*(DE) GERMANY JAN PRELIMINARY MANUFACTURING PMI: 45.2 V 44.5E, (13th straight contraction and highest since Feb 2019)
*(UK) JAN PRELIMINARY PMI MANUFACTURING: 49.8 V 48.8E, (9th straight month of contraction but highest since April)
*(EU) EURO ZONE JAN PRELIMINARY MANUFACTURING PMI: 47.8 V 46.8E (12th straight month of contraction but highest since Apr 2019)
BA Considering another 787 Dreamliner production cut amid decline in wide-body demand - press
Earnings reports this week were highlighted by a number of major technology names. Intel shares popped to a nearly two-decade high after posting big top and bottom line beats, citing good data center demand, and issuing strong guidance. Netflix subscription numbers beat along with earnings, but investors took profits as competition multiplies. IBM topped estimates and reported strong EPS and revenue numbers as some investors saw signs of a turnaround for the tech giant. Citrix reported beats and raised guidance as its transition to a subscription-based model seems to be progressing smoothly. Boeing announced that it doesn’t expect regulators to sign off on the return of the 737 MAX until June or July, which would be months later than the manufacturer previously estimated.
SUNDAY 1/19
(CN) China Ministry of Industry and Information Technology (MIIT) Official Miao Wei: Studying postponing the reduction of subsidies for new energy vehicles (NEVs)*; China faces big pressure in stabilizing industrial production this year
MONDAY 1/20
(US) President Trump and France President Macron agree to continue discussions regarding digital tax through the remainder of 2020 - press
(CN) China city of Wuhan reports 4th death from pulmonary coronavirus; Beijing confirms human-to-human transmission; China Pres Xi: Party committees, governments and relevant departments at all levels should put people’s lives and health first.
*(JP) BANK OF JAPAN (BOJ) LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED AT -0.10%; AS EXPECTED
TUESDAY 1/21
UBSG.CH Reports Q4 Net $722M v $682Me, Adj Pretax $1.2B v $478M y/y; Rev $7.05B v $6.97B y/y; To buyback $450M in shares in H1
*(DE) GERMANY JAN ZEW CURRENT SITUATION SURVEY: -9.5 V -13.5E; EXPECTATIONS SURVEY: 26.7 V 15.0E (highest since 2015)
(US) US President Trump: US in the midst of a economic boom; recent trade deals represent new model - Davos speech
(US) CNN producer: CDC expected to report this afternoon that the first case of Wuhan coronavirus in the US has been discovered in Washington state
BA CNBC: Boeing doesn’t expect regulators to sign off on 737 Max until June or July, months later than the manufacturer previously expected
IBM Reports Q4 $4.71 v $4.69e, Rev $21.8B v $21.7Be
*(KR) SOUTH KOREA Q4 PRELIMINARY GDP Q/Q: 1.2% V 0.7%E (fastest pace since Q3 2017); Y/Y: 2.2% V 1.9%E
WEDNESDAY 1/22
*(CA) BANK OF CANADA (BOC) LEAVES INTEREST RATES UNCHANGED 1.75%; AS EXPECTED
AER CEO: there is No alternative to the 737MAX, and airlines want more of these aircraft - press
(US) Association of American Railroads weekly rail traffic report for week ending Jan 18th: 499.7K, -8% y/y
BA CEO: Expects 737 MAX production will resume months before return to service in midyear; no discussions about cutting dividend
(CN) Wuhan bus, metro, ferry and passenger service have suspended operations from Jan 23rd to address China coronavirus outbreak; recovery time will be announced separately - China state media
TXN Reports Q4 $1.12 v $1.02e, Rev $3.35B v $3.22Be
(CN) China confirms 571 cases of new Coronavirus v 473 reported ~13 hours ago - China Press
*(AU) AUSTRALIA DEC EMPLOYMENT CHANGE: +28.9K V +10.0KE; UNEMPLOYMENT RATE: 5.1% V 5.2%E (9-month low for jobless rate)
THURSDAY 1/23
PG Reports Q2 $1.42 v $1.37e, Rev $18.2B v $18.3Be
*(EU) ECB LEAVES MAIN 7-DAY REFINANCING RATE UNCHANGED AT 0.00%; AS EXPECTED; formally announces Strategic Review (as expected)
(EU) ECB's Lagarde: Strategic Review to look at a host of issues and how to deliver price stability - Q&A
(CN) China Xinhua: Total coronavirus cases at 830 vs 639 prior*; death toll now at 25 as of Jan 23; At least 2 deaths have been confirmed outside of the Hubei province
FRIDAY 1/24
(EU) ECB's Lagarde: ECB policy is not on autopilot during Strategic Review
*(DE) GERMANY JAN PRELIMINARY MANUFACTURING PMI: 45.2 V 44.5E, (13th straight contraction and highest since Feb 2019)
*(UK) JAN PRELIMINARY PMI MANUFACTURING: 49.8 V 48.8E, (9th straight month of contraction but highest since April)
*(EU) EURO ZONE JAN PRELIMINARY MANUFACTURING PMI: 47.8 V 46.8E (12th straight month of contraction but highest since Apr 2019)
BA Considering another 787 Dreamliner production cut amid decline in wide-body demand - press
