To download the report, please click here If you would like to subscribe to receive the research sheets directly in your inbox, you can now do so under the Research Suite section of the portal. To subscribe simply check the box next to “Email these reports” under the desired category.
European bourses are lacklustre this morning (Stoxx 50 U/C) with little in the way of over/underperformers thus far. Newsflow has been very limited, with opening movers earnings driven; similarly, sectors are mixed/flat aside from utilities which received a valentines gift from EDF’s (+8.0%) stellar earnings. Sticking with the CAC on earnings where Renault (+3.0%) metrics were mixed, but most notably they significantly cut their dividend by over EUR 2.00/shr as well as downbeat guidance which does not take into account the coronavirus. However, Co. shares have reversed course from a downbeat during their subsequent earnings call on interim CEO remarks. Turning to the FTSE 100 (+0.1%) which has had, compared to other bourses, a marginally more eventful morning driven by some mild Sterling choppiness after yesterday’s Chancellor induced surge. Individual UK movers are also earnings driven, with earnings from AstraZeneca (U/C) who missed on revenue and EPS while RBS (-6.0%) beat on operating profit but this was not enough to overcome projected negative impacts from regulation changes as well as planned balance sheet reductions. Additionally, they are to re-name themselves as Natwest Group this year, which isn’t too surprising as circa. 80% of RBS’ clients joined through the Natwest brand.
EUR – Still out of favour in the G10 arena, but the single currency has regained some composure after extending losses across the board and perhaps deriving a degree of comfort from preliminary German Q4 GDP just evading contraction plus broadly firmer than forecast pan Eurozone prints alongside employment readings. Eur/Usd has clawed back from deeper sub-1.0900 lows after arresting its slide just above the next line of technical support ahead of 1.0800 around 1.0821, while Eur/Gbp has defended 0.8300 again. However, the headline pair needs to reclaim Fib retracement levels over 1.0850 to really become loved again.
USD – Amidst extremely narrow confines vs most major counterparts, the Dollar remains largely dependent on others for direction ahead of a raft of US data including retail sales and ip in advance of preliminary Michigan sentiment having derived little if any independent impetus via Thursday’s CPI metrics. Hence, the DXY is still tethered to the 99.000 anchor, albeit after inching to another fresh 2020/multi-month apex at 99.166 and slightly closer to next upside chart hurdle protecting last year’s peak (99.249 and 99.667 respectively).
CAD/AUD/GBP/JPY/NZD/CHF – The Loonie and Franc are marginal outliers flanking the aforementioned tightly bound trade against the Greenback, as Usd/Cad breaks below 1.3250 more convincingly against the backdrop of firmer oil prices that are also helping the NOK pare losses vs the recovering Eur more than the SEK. However, Usd/Chf has crossed 0.9800 and Eur/Chf is firmer above 1.0600 in wake of mixed Swiss producer/import price data. Meanwhile, the Aussie and Kiwi are both consolidating off this week’s post-RNBZ rebound highs and hovering near 200 HMAs (0.6720 and 0.6444 respectively), and similarly the Yen continues to meander between 109.90-75, but with decent options either side (1.7 bn from 109.70-80 and 1.1 bn at the 110.00 strike). Last, but by no means least, Sterling has paused for breath after yesterday’s UK cabinet reshuffle exertions with Cable respecting resistance again at 1.3070 and drifting back under 1.3050, partly on cross flows due to the Eur/Gbp bounce noted above.
EM – The Zar is clearly outperforming across the region and in wider circles with news that SA’s Eskom plans no load-shedding on Valentines Day appeasing investors and helping the Rand hold well above 15.0000 in contrast to the Turkish Lira that is still unloved despite more favourable macro news via a narrower than anticipated current account deficit, as the Try treads water close to worst levels vs the Buck circa 6.0600+.
Core debt off best levels, but holding fairly comfortably above par heading into the pm session and a US data blast before Fed’s Mester wraps up this week’s roster of Central Bank speakers. However, Italian bonds are out of favour on February 14 following a marked recovery rally fuelled by almost record demand for 15-year paper and as officials fret about the adverse impact of China’s virus outbreak on a fragile domestic economy.
WTI and Brent front month futures are firmer by just over USD 0.50/bbl at present, as newsflow is light and coronavirus concerns appear to having a lesser impact as we end the week; with some upside seen in recent trade, perhaps as participants close positions heading into Monday’s US holiday. Crude related newsflow has been very minimal, as we continue to await confirmation as to whether Russian Energy Minister Novak will support the JTC’s H1 production cut recommendation; as well as any guidance around an earlier meeting, although the likelihood of this continues to diminish from a calendar-viability perspective. OPEC aside, ING note that Sublime China data indicated that independent refinery run rates in the Shandong province continue to decrease, now around 48%. Turning to metals, where spot gold is little changed at present and remains very much rangebound in directionless trade. In contrast to crude, base metals are continuing to experience mild heartbreak on virus updates, as Japan confirm their first fatality and the China total rises to over 63k infected and 1.3k deceased.