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On 14 February 2020 - US flat; Europe off on earnings, virus worry; Asia mixed

Anne D Picker

Anne D Picker - Econoday

Mixed US economic data, mixed corporate earnings leave market uncertain.

US markets

US equities ended narrowly mixed Friday as the market continued to grapple with fallout from the Chinese coronavirus. The Dow industrials eased 0.1 percent, the S&P 500 gained 0.2 percent, and the NASDAQ also rose 0.2 percent.

A mixed batch of US economic reports left the market uncertain, including weak industrial production and core retail sales readings, offset in part by a better than expected consumer sentiment report.

In economic data, US retail sales rose 0.3 percent in January and also gained 0.3 percent excluding autos. Both of these are moderate and both hit Econoday's consensus. When excluding autos and also gasoline, retail sales rose a slightly better 0.4 percent, which just exceeds Econoday's consensus range. But when excluding not only autos and gas but also food services and building materials, sales came in unchanged, which missed expectations.

Separately, the shutdown of the Boeing 737 Max and a drop in utility production pulled down industrial production by an as-expected 0.3 percent in January. Manufacturing fell 0.1 percent. In another report, consumer sentiment rose for a second straight month, 1.2 points higher in the preliminary February reading, the best since March 2018.

Among stock sectors, real estate remained the top performer on the day and on the week. Technology shares outperformed, with help from software stocks. Energy lagged the most, despite an uptick in oil prices. Consumer staples were hurt by weakness in food and drug stores. Communications services lagged, along with industrials, consumer discretionary, and health care.

Among winners Friday, chipmaker Nvidia rose 7.1 percent after its results and guidance beat expectations. eBay, the online auctioneer, rose 2.6 percent after raising its guidance and buyback plans. Expedia, the travel agency, rallied 11 percent after an earnings beat and strong 2020 guidance.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 83 cents to US$57.35, while gold rose US$6.90 to US$1585.60. The US dollar was mixed against major currencies. The US Treasury 30-year bond yield fell 3 basis points to 2.04 percent while the 10-year note yield fell 3 basis points to 1.59 percent.

European markets

Weak corporate earnings and coronavirus worries weakened equities slightly Friday. The Europe-wide STOXX 600 eased 0.1 percent, the German DAX was off 0.01 percent, the French CAC declined 0.4 percent, and the UK FTSE-100 fell 0.6 percent.

Among sectors in the STOXX 600, outperformers included defensive sectors -- real estate, utilities, food & beverage, and insurance. Lagging were basic resources, autos & parts, banks, health care, and travel & leisure.

Among companies in focus, AstraZeneca, the UK pharma, dropped 4.3 percent after guiding lower on the expected impact of the coronavirus on business in China. Renault, the French automaker, fell 0.9 percent after poor results, lower guidance, and cutting its dividend. Royal Bank of Scotland fell 6.8 percent after the market reacted poorly to its latest business plan. Pernod Ricard and Remy Cointreau, French liquor companies, fell 0.5 percent and 0.9 percent, respectively, after an analyst downgrade.

On the positive side, Electricite de France rose 10 percent after its earnings beat expectations. Unipol Gruppo, the Italian financial services, rose 6.4 percent on a positive earnings surprise.

In economic data, the German economy stagnated at the end of 2019. Zero quarterly growth was at the weak end of market expectations and, following a 0.2 percent fall and a 0.2 percent rise in second and third quarters respectively, means that total output has been essentially just flat for the last three quarters.

Asia Pacific markets

Major Asian markets posted mixed results on the day Friday and also diverged over the week. The regional data calendar was again relatively light at the end of the week, keeping the focus of investors on incoming news relating to the coronavirus outbreak. Reports late in the trading session quoted a senior executive from Chinese e-commerce firm Alibaba advising that the outbreak had caused significant disruption to the firm’s operations, while the Singapore government was also reported to have warned that the impact of the outbreak on the Singapore economy has already exceed that of the SARS outbreak in 2003.

The Shanghai Composite index and Hong Kong’s Hang Seng index both closed up on the day and on the week, the former up 0.4 percent and 1.4 percent respectively and the latter up 0.3 percent and 1.5 percent respectively. Australia’s All Ordinaries index posted similar gains, up 0.3 percent on the day and 1.5 percent on the week. Japanese markets, however, closed lower, with shares of automaker Nissan down sharply to ten-year lows after it cut forecasts for operating revenue and announced it would not pay a dividend in the second half. The Nikkei index fell 0.6 percent on the day and on the week, while the Topix index closed down 0.6 percent on the day and 1.7 percent on the week.

Japan's Index of Tertiary Industry Activity fell 0.2 percent on the month in December after advancing 1.4 percent in November, broadly in line with the previously published Markit services sector PMI survey. India's wholesale price index increased by 3.1 percent on the year in January, up from 2.59 percent in December, mainly reflecting stronger fuel prices. WPI inflation is now at its highest level since April 2019 and has rebounded strongly from a slump towards the end of last year.

Looking forward

Central Bank activities

Feb-17

Australia

RBA Meeting Minutes

Feb-19

US

FOMC Minutes

Feb-20

Eurozone

ECB Minutes

The following indicators will be released this week...

Europe

Feb-18

Germany

ZEW Survey (February)

 

UK

Labor Market Report (January)

Feb-19

UK

CPI (January)

 

 

PPI (January)

Feb-20

Eurozone

EC Consumer Confidence (February)

 

France

CPI (January f)

 

Germany

GFK Consumer Climate (March)

 

 

PPI (January)

 

Switzerland

Merchandise Trade (January)

 

UK

CBI Industrial Trends (Februrary)

 

 

Retail Sales (January)

Feb-21

Eurozone

HICP (January)

 

 

PMI Composite Flash (February)

 

France

PMI Composite Flash (February)

 

Germany

PMI Composite Flash (February)

 

Italy

CPI (January)

 

UK

CIPS/PMI Composite Flash (February)

 

 

Public Sector Finances (January)

Asia Pacific

Feb-17

China

HPI (January)

 

Japan

GDP (Q4a)

 

Singapore

Merchandise Trade (January)

Feb-19

Japan

Machine Orders (December)

 

 

Merchandise Trade (January)

Feb-20

Australia

Labor Force Survey (January)

Feb-21

Japan

CPI (January)

 

 

PMI Composite Flash (February)

 

 

PMI Manufacturing Index Flash (January)

Americas

Feb-18

Canada

Manufacturing Sales ( December)

 

US

Housing Market Index ( February)

 

 

Treasury International Capital (December)

Feb-19

Canada

CPI (January)

 

US

Housing Starts (January)

 

 

PPI-FD (January)

Feb-20

US

Jobless Claims (Week of Feb. 15)

 

 

Philadelhia Fed Business Outlook Survey (February)

Feb-21

Canada

Retail Sales (December)

 

US

Existing Home Sales (January)

 

 

PMI Composite Flash (February)

Global stock markets

 

Index

14 Feb 2020

Daily Change

% Change Daily

North America

United States

Dow

29398.08

-25.23

-0.1

 

NASDAQ

9731.18

19.21

0.2

 

S&P 500

3380.16

6.22

0.2

Canada

S&P/TSX Comp

17848.36

27.19

0.2

Europe

UK

FTSE 100

7409.13

-42.90

-0.6

France

CAC

6069.35

-23.79

-0.4

Germany

XETRA DAX

13744.21

-1.22

0.0

Italy

MIB

24867.01

-25.14

-0.1

Spain

Ibex 35

9956.8

47.00

0.5

Sweden

OMX Stockholm 30

1885.62

2.60

0.1

Switzerland

SMI

11128.81

36.46

0.3

Asia/Pacific

Australia

All Ordinaries

7227.12

22.51

0.3

Japan

Nikkei 225

23687.59

-140.14

-0.6

 

Topix

1702.87

-10.21

-0.6

Hong Kong

Hang Seng

27815.6

85.60

0.3

S. Korea

Kospi

2243.59

10.63

0.5

Singapore

STI

3220.03

-0.06

0.0

China

Shanghai Comp

2917.01

10.94

0.4

Taiwan

TAIEX

11815.7

23.92

0.2

India

Sensex 30

41257.74

-202.05

-0.5

Note: all releases are listed in local time.

Important Information

Econoday Inc. is a US company that provides financial commentary and indicators to industry professionals. All information provided and views expressed are those of Econoday. Reference in this document to specific securities should not be construed as a recommendation to buy or sell these securities, but is included for the purposes of illustration only. Past performance is not a reliable indicator of future results. The value of investments can go down as well as up and investors may not get back the amount invested.