11
Feb
11
Feb

Lagarde, Powell Speeches, UK GDP and Trade Balance, RBNZ Rate Decision

While the dollar continues to trade in a strong position against other major currencies including the euro and the Japanese yen (JPY), some currencies from emerging markets including the South African rand (ZAR) and the Indian rupee (INR) managed to recover and traded stronger. On Tuesday key economic data including the unemployment rate and manufacturing production for December will be published in South Africa.

While global equity markets further recovered with some including the US Tech 100 reaching a new all-time high, oil prices also rebounded with a barrel of crude oil as per WTI specification trading again above $50 by Tuesday morning. Meanwhile gold and platinum prices were marginally down, while the volatility in palladium markets subsided compared to last week.

For Tuesday trade balance, industrial production and GDP data will be released in the UK. Then from the US the weekly Redbook Store Sales statistic and also the NFIB Small Business Optimism Index for January will be released.

On Wednesday night the Reserve Bank of New Zealand (RBNZ) is expected to make its latest interest rate decision. Most analysts do not expect a change from the current all-time low of one percent. The Kiwi (NZD/USD) has been under pressure over the past weeks not only due to the strong greenback but also due to concerns over the coronavirus epidemic in China and the impact it will have on exports and tourism as the country among many basically banned tourists from China.

 

EUR/USD

As the dollar climbed to the strongest level in a quarter against other major currencies, the EUR/USD pair fell for the sixth trading day in a row and only being supported marginally above the 1.09 level. Economic data from Italy on industrial production, which declined by 2.7% in December, was seemingly in line what was seen last week in that statistic from Germany and France, indicating that the manufacturing sector across Europe might indeed be in trouble.

Relatively few fundamental data releases can be expected from the Euro-zone on Tuesday. One key even could be the presentation of the ECB Annual Report for 2018 at the European Parliament in Strasbourg, which is set to take place at 2 PM GMT.

Also on Tuesday the semi-annual Monetary Policy Report from the FOMC will be presented by Fed Chairman Jerome Powell to the Committee on Financial Services of the US House of Representatives.

The EUR/USD chart

Europe 50

With market optimism outweighing concerns about weak growth and the coronavirus epidemic in global markets, the Europe 50 managed to climb to a new all-time high by Tuesday morning, just like some of its counterparts in the US.

Among the German car manufacturers Daimler was the first to release its quarterly results on Tuesday. After a flat performance on Monday, Daimler stocks outperformed most other DAX stocks, despite the company’s CEO announcing that it would cut the dividend to €0.90 after reaching €3.25 in the previous year, while overall revenue increased to €172.7 billion given the new sales record in 2019. However as the company is investing heavily in research and development of electric cars and is reported to reduce its workforce by 15 thousand people, costs weigh heavily with the company even reporting a loss in the last quarter.

Another top performer in Europe was the Air France KLM stock, with the company reporting an increase of passenger-kilometres by 2.7% in January with load factor and available capacity also being on the rise. With Air France and KLM extending the suspension of routes to mainland China until the mid of March for the time being, it remains to be seen what overall market impact the coronavirus epidemic will have on the global travel industry.

Also on Tuesday Air Liquide will publish quarterly results.

The Europe 50 chart

WTI Oil

After closing below $50 per barrel of WTI crude oil, oil prices climbed by Tuesday morning possibly helped by overall market optimism. However analysts cautioned that the oil market remains in a very fragile state given the demand-shock from the coronavirus epidemic in China, which contributed to a sizable decline in travel and factories operating across China. While some investors are oftentimes cautious about believing official data coming from China, analysts from Morgan Stanley indicated that the production levels in some key regions including Shanghai and Guangzhou could be indeed significantly lower as the air pollution level measures in PM 2.5 was in the past days at only about a third of its six-years average.

Also important for the oil markets might be whether Russia agrees to follow the OPEC+ technical panel recommendation from last week to cut oil production across OPEC+ countries by 600 thousand barrels per day.

On Tuesday the American Petroleum Institute (API) publishes weekly crude oil stockpile statistics, followed by data from the Energy Information Administration (EIA) on Wednesday.

The WTI Oil chart

US 500

US stock indices strongly recovered on Monday, with the US 500 index reaching a new all-time high by Tuesday morning. While the continued market impact of the coronavirus epidemic remains still unclear, with the death toll according to official statistics surpassing a thousand, some might see the move by the Chinese to allow factories to reopen as a sign of normalization. Still analysts warn that the virus could have sizable impact on the growth of the Chinese market and also supply chains worldwide.

Still, chip sector (US Semiconductors ETF +1.53%) stocks were some of the best performers on Monday, recovering from the slump on Friday with AMD (+5.01%) and Nvidia (+4.38%) being some of the best performers among blue-chip companies on Monday.

Lyft (+7.76%) stocks surged to a new five-months high just a day before the company is set to release its quarterly results on Tuesday afternoon. One reason for the sudden surge higher was a positive analyst rating, which also assumed that the ride hailing app company might become an acquisition target. Still, even at the current price the stock is trading significantly below its IPO price of $72, a fate it is sharing with its main competitor Uber (-1.01%).

More blue-chip companies are set to release their quarterly results this week, including CVS Health, Cisco Systems and Shopify on Wednesday as well as Nvidia, Alibaba, Roku and PepsiCo on Thursday.

The US 500 chart

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