Notes/Observations
- Global Risk appetite continues to find tailwinds after China’s PBoC cut of a crucial interest rate seen as move to support the economy which has been hit by the coronavirus outbreak. – US and Canada markets both closed for holidays
Asia:
- China National Health Commission Coronavirus Update for Feb 16th: 2.0K additional cases v 2.0K prior; Additional death 105 v 142 prior
- China Hubei province coronavirus update for Feb 16th: 1.9K additional cases v 1.84K prior, Additional deaths 100 v 139 prior
- PBOC conducted CNY200b of 1-year MLF which saw the rate cut by 10bps to 3.15% in the operation; Analysts noted that the interest rate reduction viewed as a clear signal that the central bank would guide economy-wide borrow costs lower to support the economy in the face of the coronavirus shock. (Note: loan prime rate (LPR) might also be cut later this week (Thursday Feb 20th). The current 1-year LPR stands at 4.15% and the 5-year LPR is at 4.80% (PBOC last cut the LPR rates back on Nov 20th 2019)
- China Fin Min Liu Kun: China to implement targeted and phased company tax cuts and reduce unnecessary government expenses
- China govt said to be considering starting purchases of US farm goods by early March to show commitment to phase one trade deal; PBOC noted that the domestic banks would tolerate higher levels of problem loans as part of those support efforts during coronavirus
- Japan Q4 Preliminary GDP registered its largest annualized decline since 2014 as sales tax hike hit consumer and business spending (QoQ: -1.6% v -1.0%e;Annualized QoQ: -6.3% v -3.8%e
- Singapore Q4 Final GDP Q/Q: 0.6% v 0.1%e; Y/Y: 1.0% v 0.8%e; Govt cuts 2020 GDP growth forecast from 1.5-1.9% range to -0.5% to +1.5% range
- Thailand NESDC Planning Agency cut its 2020 GDP growth forecast from 2.7-3.7% range to 1.5-2.5%
Europe:
- IMF Manager Dir Georgieva noted that coronavirus could damage 2020 global economic growth and hoped that any cut to growth would be in region of 0.1-0.2%. Full impact depended on how quickly spread of virus was contained
- Moody’s affirmed Ireland sovereign rating at A2; outlook Stable
Brexit:
- UK Chief Brexit Negotiator Frost in an upcoming speech to highlight UK’s goals for future relations with the EU. PM Johnson prepared to dismiss demands by Brussels for the UK to abide by EU rules on tax and workers’ rights post Brexit. Senior members of the Conservative party are set to reject several EU demands they deemed as ridiculous and to demand a Canada style agreement
- Chancellor of the Exchequer Sunak (Fin Min) said to be preparing ease fiscal rules in his 1st budget as govt apply pressure for him to open the spending taps
Americas:
- USTR raised duties on EU aircrafts to 15% from 10%, effective March 18th; left tariffs on Scotch, cheese, French wine unchanged (after hours Friday)
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 +0.20% at 431.58, FTSE +0.25% at 7,427.45, DAX +0.20% at 13,771.12, CAC-40 +0.09% at 6,074.70, IBEX-35 +0.11% at 9,968.00, FTSE MIB +0.35% at 24,954.33, SMI +0.35% at 11,167.50, S&P 500 Futures +0.25%]
- Market Focal Points/Key Themes: European Indices trade mostly in the green territory after higher session in China and slightly higher US Index futures. US and Canadian markets are closed due to national holidays. On the corporate front, shares of Bayer trade 2% lower this morning after it announces to swiftly appeal jury decision in dicamba case. French firm Alstom confirms discussions with Bombardier over a unit and also trades higher. Tullow Oil in the UK trades 5% lower amid announcement that Marina-1 exploration well has not encountered significant hydrocarbons. On the earnings front, shares of automobile components maker Faurecia trade sharply higher in Paris following its earnings, raised dividend and initial full-year outlook. Petra Diamonds trade lower approximately 15% following its H1 results. In other news, NMC Health co-chairman and director both resigned from company, stock trades lower just almost 2%.
Equities
- Energy: Tullow Oil [TLW.UK] -5% (well update)
- Financials: Icade [ICAD.FR] -1.5% (earnings)
- Healthcare: Bayer [BAYN.DE] -2% (lawsuit), NMC Health [NMC.UK] -2.5% (Chairman resigns)
- Industrials: Faurecia [EO.FR] +7% (earnings), Alstom [ALO.FR] +2% (confirms discussions with Bombardier), BASF [BAS.DE] – 1.5% (lawsuit)
Speakers
- Renewed speculation that China was considering delaying the annual National People’s Congress meeting that is scheduled in March
- Macua Secretary for Economy and Finance Lei Wai Nong: Casinos could reopen Thursday (Feb 20th), but could also be delayed for additional 30 days on conditions. Casinos must reopen after the additional 30 days if taken.
- Russia Energy Min Novak discussed oil market with Iran oil min Zanganeh
Currencies/Fixed Income
- USD was slightly softer in a quiet session as global risk appetite continued to find some tailwinds. A recent cut in a crucial interest rate by China’s PBoC was viewed as China govt willing to support its domestic economy being impacted by the coronavirus outbreak.
- EUR/USD moved off 3-year lows with focus on the upcoming flash PMIs across Europe on Friday. Pair higher by 0.1% at 108.45.
- USD/JPY range bound with 110 area seen as key resistance.
Economic Data
- (NO) Norway Jan Trade Balance (NOK): 21.2 v 25.6B prior
- (TR) Turkey Jan Central Gov’t Budget Balance (TRY): No est v -30.8B prior
- (CH) Swiss weekly Total Sight Deposits (CHF): 590.1B v 589.6B prior; Domestic Sight Deposits: 504.2B v 503.0B prior
Fixed Income Issuance
- (SK) Slovakia Debt Agency (Ardal) sold total €257.0M in 2028 and 2037 bonds
Looking Ahead
- (RU) Russia Central Bank (CBR) Quarterly Monetary Report – 05:30 (DE) Germany to sell €1.5B in 6-month Bubill
- 05:30 (NL) Netherlands Debt Agency (DSTA) to sell €2.0-4.0B in 3-month and 6-month bills
- 06:25 (BR) Brazil Central Bank Weekly Economists Survey
- 08:00 (RU) Russia Jan Industrial Production Y/Y: 1.6%e v 2.1% prior
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:00 (ES) Spain Debt Agency (Tesoro) size announcement on upcoming issuance
- 08:30 (CA) Canada Dec Int’l Securities Transactions (CAD): No est v -1.8B prior -08:50 (FR) France Debt Agency (AFT) to sell €3.2-4.4B in 3-month, 6-month and 12-month bills – 09:00 (IE) ECB’s Lane (Ireland, chief economist)
- 09:45 (EU) ECB weekly QE bond buying update
- 10:00 (CO) Colombia Dec Trade Balance: -$0.5Be v -$1.7B prior; Total Imports: $4.1Be v $4.8B prior
- 15:00 (NZ) New Zealand Jan House Sales Y/Y: No est v 12.5% prior
- 17:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 107.8 prior
- 19:30 (AU) RBA Feb Minutes
- 21:00 (NZ) New Zealand Jan Non Resident Bond Holdings: No est v 52.0% prior
- 22:35 (JP) Japan to sell 5-Year JGB Bonds
- 23:30 (TW) Taiwan to sell TWD170B in 12-month Certificate of Deposits (NCD)
- 23:30 (TW) Taiwan to sell TWD30B in 10-year Bonds
