Good morning. Here’s what’s happening as Friday begins and Asia gears up to celebrate the Lunar New Year.
First, the scoreboard: (8:15am AEDT)
• Dow: 20,101 +132 (+0.2%)
• S&P 500: 2298 -0.5 (-0.02%)
• SPI 200 Futures (March): 5,649 -2 (-0.03%)
• AUD/USD: 0.7531 -0.00441 (-0.6%)
1. US stocks stall: The US stocks rally stalled and the S&P 500 fluctuated near a record high as investors deciphered a slew of corporate earnings that delivered a mixed picture on the state of the American economy. Mexico’s peso slumped as the showdown over a border wall plan intensified and Treasuries erased losses. Australian shares are poised to open flat.
2. Data today: US reports fourth quarter GDP. It is forecast to report a 2.2% increase. Australia reports export and import prices as well as producer prices. China business sentiment index is also due.
3. UK economy picks up pace: Britain’s economy grew faster than expected in the fourth quarter of 2016, according to a preliminary GDP release from the Office for National Statistics on Thursday. GDP grew by 0.6% in the quarter, in line the consensus forecast of economists who saw growth increasing by 0.5%. On a year-to-year basis, GDP was 2.2% higher compared to a forecast 2.1%. The data was closely watched as Q4 was just the second full quarter of activity after Britain’s historic vote to leave the European Union. Initial predictions of economic doom after the Brexit vote have so far failed to materialise.
4. US data slips: A bigger-than-expected number of Americans filed for unemployment benefits last week, although the four-week average of claims fell to the lowest level since 1973. New home sales dropped 10.4%
5. Australian dollar: The Australian currency lost ground and is poised to weaken for the second straight day largely driven by investor’s move back to the US dollar, which had slipped to a seven-week low.
6. The Dutch outed Soros: Holland’s markets regulator “inadvertently” posted details on its website of short positions held by hedge funds in the Netherlands, including those of billionaire George Soros, according to a report in the Financial Times. The details were briefly posted on Tuesday, showing Soros to have bet against Dutch bank ING, taking a short position of 0.3% in the lender in June 2016, the FT reported.
7. Trump plans border tax for Mexican wall: White House press secretary Sean Spicer, told reporters on Thursday that the administration is considering a 20% border tax on Mexican imports according to Bloomberg. Top oil trader Pierre Andurand says such a tax will push up oil prices.
8. Fiat likes Trump’s plans: Fiat-Chrysler CEO Sergio Marchionne is optimistic about President Donald Trump’s plans. During the company’s quarterly earnings call on Thursday, Marchionne was asked about the economic agenda and plans of Trump. Marchionne said that the president’s plans — including possibly a border tax adjustment and more — are a good thing for the carmaker.
9. Barclays chooses Dublin: Barclays has chosen the Irish Republic’s capital, Dublin, as its headquarters in the European Union post-Brexit, according to Bloomberg. The report said Britain’s banking giant is aiming to make its Dublin outfit its European HQ so it would not lose access to the Single Market, regardless of how the government’s negotiations turn out with EU officials.
10. Goldman Sachs on Fed balance sheet runoff: The US investment bank expects US mortgage spreads to widen 5-10bp in 2017 as markets begin to price the tapering of mortgage backed securities purchase by the US Fed. However it expects the tapering to begin only in 2018.
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