Original insights into market moving news

{PODCAST] US Open Rundown 29th January 2019

  • Major European indices nursed opening loses and extended on gains Euro Stoxx 50 +0.5%], outperformance is seen in the FTSE 100
  • Sterling awaits the outcome of UK Parliament’s vote on Brexit Plan B alongside amendments, but the still trades weaker vs the Euro
  • Looking ahead, highlights include US Consumer Confidence, UK Parliamentary vote on Brexit 'Plan B', BoE's Haldane Speaking, US 2yr FRN & 7yr Note Auction
  • EARNINGS: Advanced Micro Devices, Amgen, Apple, Verizon Communications, Lockheed Martin, Allergan, eBay, LVMH


Asian equity markets traded lower for most the session as the region followed suit to the negativity on Wall St where sentiment was dampened by corporate updates in which industrial bellwether Caterpillar missed on earnings and Nvidia reduced its guidance with both citing a slowdown in China, while the DoJ announcement of charges against Huawei raised concerns regarding the potential impact this could have on US-China relations. ASX 200 (-0.5%) was negative on return from the extended weekend with the index dragged lower by underperformance in healthcare as Resmed shares tumbled on poor sales figures and with energy names pressured by the recent 3% drop in oil prices, while price action in the Nikkei 225 (Unch.) was at the whim of the JPY-risk dynamic. Elsewhere, Hang Seng (-0.2%) and Shanghai Comp. (-0.1%) weakened after the US announced charges against Huawei including intellectual property theft, as well as bank and wire fraud, although markets gradually rebounded off lows as focus shifted to the upcoming trade discussions. Finally, 10yr JGBs were flat as prices failed to benefit from the weakness across stocks, while a mixed 40yr JGB auction also failed to provide a catalyst for direction. 

PBoC skipped open market operations for a net neutral daily position. (Newswires)
PBoC set CNY mid-point at 6.7356 (Prev. 6.7472)

US Department of Justice is formally seeking the extradition of Huawei's CFO to the US and announced a 13-count indictment including bank and wire fraud charges against Huawei, while there was an additional 10-count indictment against the Co. for conspiring to steal intellectual property from T-Mobile. (Newswires)

China Foreign Ministry expressed serious concern regarding US charges on Huawei and its CFO, whilst strongly urging the US to halt unreasonable suppression of Chinese companies and asked US to withdraw arrest order for Huawei's CFO. (Newswires)

China Minister of Industry and Information Technology Miao said China will continue to lower taxes and fees for SMEs, while China will also significantly reduce the investment negative list. (Newswires)

China is expected to oppose US demands for structural changes in the next round of trade discussions and sides are said to remain divided, although it was also reported that China is planning to offer a large increase in US farm and energy purchases, as well as modest industrial policy reforms. (WSJ)

Chinese Vice Premier Liu He arrived in Washingotn DC ahead of January 30th-31st trade discussions, while the Chinese delegation includes PBoC Govenor Yi Gang, China’s Vice Finance Minister and the NDRC Vice Chairman among others. (Newswires) US Treasury Secretary Mnuchin expects to make significant progress at trade talks with the Chinese delegation this week and noted enforcement will be a top priority for trade talks. (Newswires)


US House Speaker Pelosi invited President Trump to give State of the Union Address on February 5th, which President Trump accepted. (Newswires)

US acting Attorney General Whitaker said Special Counsel Mueller's investigation is near to being completed. (Newswires)


A minimum of 270 UK MPs have publicly declared their opposition to UK exiting the EU without a deal, while over 60 more signaled they could defy UK PM May over the issue ahead of today's vote on the Brexit "Plan B". (FT)

UK Home Office said if Britain leaves without an agreement the government will seek to end free movement as soon as possible. (Newswires)

BBC’s Smith tweets, Understand PM will tell MPs today that she will seek legally binding changes to the backstop - likely to involve re-opening the Withdrawal Agreement. Subsequently tweeting that early indications of Jacob Rees-Mogg and other leading Brexiteers are set to back down over opposition to the Brady amendment.(Twitter)

ITV’s Brand tweets, DUP are not committing to the Brady amendment yet, want further assurances from the PM in particular around what the backstop alternatives might be. (Twitter)


Kremlin states that US sanctions against Venezuela's PDVSA are illegal and are clear interference in Venezuela's internal affairs; adding that Russia will analyse the impact of US sanctions and will use available legal mechanisms to defend their interests. (Newswires)

FT's Laura Hughes tweets "The DUP are backing the ‘Malthouse’ alternative. Arlene Foster: "The DUP has given its endorsement to the plan. " (Twitter) Note:This is said to be backed by both the remain and leave camps of the Conservative party but it has been rejected by EU sources


Major European equities are modestly in the green [Euro Stoxx 50 +0.5%], outperformance is seen in the FTSE 100 (+1.4%) where index heavyweights British American Tobacco (+4.6%) and Unilever (+1.7%) are in the green after a broker move and purchase of New York based ‘The Laundress’ products business respectively. Sectors are mixed, with outperformance seen in consumer staples, largely due to the aforementioned British American Tobacco and Unilever. Other notable movers include Royal Mail (-10.5%) who are at the bottom of the Stoxx 600 following their earnings, whilst Sartorius (+16.0%) are at the top of the index following a double digit increase to their 2018 sales revenue and earnings. Separately, SAP (-2.0%) are down in spite of the Co. raising their 2020 non-IFRS revenue outlook and confirming their non-IFRS profit outlook.


NZD/AUD/EUR - The Kiwi is back in pole position and just outperforming G10 peers like the Euro that is also benefiting from some cross-flows, and a generally soft US Dollar. Nzd/Usd is back up around 0.6850, with some support emanating from NZ trade data overnight alongside ongoing Aud/Nzd selling as the pair delves deeper below 1.0500 (to circa 1.0450 at one stage). Note, Aud/Usd was undermined by a sharp deterioration in NAB business conditions, but subsequently derived some traction to pare losses from 0.7140 to 0.7175 on the back of broadly upbeat comments from RBA’s Harper who reiterated guidance for the next policy move to be a hike based on strength in the Aussie jobs market and the country’s healthy budget situation. Meanwhile, Eur/Usd has inched a bit further above 1.1400 to test its 100 DMA (1.1446) having cleared a 50% Fib (1.1430), but not quite able to breach 1.1450 and challenge the next upside chart resistance at 1.1463 (61.8% Fib). Note also, the single currency may encounter option-related offers ahead of 1 bn expiries at 1.1465-75.

CAD/GBP/CHF/JPY - All narrowly mixed vs the Greenback, as the Loonie draws some solace from relative calm in the oil/commodity complex and recovers towards 1.3250, while Cable is pivoting 1.3150 and awaiting the outcome of UK Parliament’s vote on Brexit Plan B alongside amendments, but the Pound still trading weaker vs the Euro on customary month end factors (Eur/Gbp RHS demand lifting the cross over 0.8700 earlier). Usd/Chf and Usd/Jpy are just off Monday’s lows within narrow ranges of 0.9910-25 and 109.15-45 respectively, with the Franc not really reacting to Swiss trade data even though the surplus shrank substantially.

NOK/SEK - Contrasting fortunes for the Scandi Crowns as the Nok also derives comfort from a partial recovery in crude prices vs the Sek acknowledging more Riksbank commentary highlighting no rush to hike rates again (vs the Norges Bank on course to continue its tightening cycle in March). Eur/Nok sub-9.7150, Eur/Sek 10.3500+.


After earlier flurries of activity, some relative calm has descended on debt futures approaching midday in Europe. Gilts have recovered a bit of poise from a fractional new 122.99 Liffe base, but still marginally lagging Bunds that are hugging the 165.00 line after a moderately weaker Schatz auction than the previous 2 year German offering. Meanwhile, US Treasuries are also essentially straddling parity, awaiting more supply, scheduled releases and any further news on the amended calendar for data suspended during the record 35 day Government shutdown on day 1 of the FOMC.


Brent (+1.0%) and WTI (+0.9%) prices are higher, and around the USD 60/bbl and USD 52/bbl level respectively, after somewhat pairing back the sessions initial losses; as the risk sentiment has improved from yesterday. US have imposed sanctions on Venezuelan state-owned oil firm PDVSA, aiming to significantly reduce their crude exports to the US; additionally, trying to pressure President Maduro into stepping down. Elsewhere, Nord Stream 2, a new gas export pipeline running from Russia to Europe, continues in discussions to raise EUR 6bln in financing. Separately, Total have announced a significant new discovery in the North Sea, which has an estimated 250mln barrels of oil equivalent of recoverable resources.

Gold (+0.3%) is in the green, benefitting from dollar weakness amidst an uneventful overnight session; with the yellow metal towards its session high of USD 1309.4/oz. Following the lifting of sanctions against Rusal, the LME has begun accepting aluminium deliveries from the Co. into their warehouses.

Venezuela President Maduro said US is stealing CITGO and that they will begin legal action, while Venezuela also ordered PDVSA customers with tankers waiting to load US-bound crude, to prepay cargoes or they will not be delivered. (Newswires)

Busy week ahead, via Danske: