global equities

Global Equities Mixed, Wall Street to Trade Dovish on Profit Warnings

Profit Warnings
US Coronavirus cases

First virus death toll in US California and corporate profit warnings weigh down risk sentiment. 

Summary: Asian and European markets today saw major indices and key equities trade on polar opposites. While major Asian indices and equities traded on a positive note as market bulls still remained supported by news of major central banks working to take stimulus measures to support the economy, the European market saw major indices and key equities trade lower today.

Headlines suggested that ECB would follow the path of the US Fed and Bank of Canada and cut interest rates next week. Still, profit warnings from major European corporate and comments from BOE’s next governor Andrew Bailey stating that more clarity is needed before taking solid stimulus measures turned investor sentiment in risk-averse direction. 

Precious Metals: Price of rare metals gained a boost in European market hours as safe-haven demand spiked over escalating COVID-19 victims. Further, corporate profit warnings from Europe and BOE’s designated governor Andrew Bailey’s comments on stimulus measures added momentum to rare metal demand. 

On The Lookout: As there are no signs of COVID-19 outbreak peaking in any major global economies aside from China anytime soon, all eyes are fixed on virus outbreak-related headlines and moves surrounding response measures for virus outbreak. Following US Federal Reserve earlier this week, the Canadian central bank reduced its interest rate by 50 basis points during its monthly interest rate decision meeting yesterday.

OPEC meeting today saw members agree on the biggest supply cut since 2008, having decided to cut back an additional 1.5 million BPD until the second quarter of 2020 but decided to hold back from bringing it into effect unless Russia agrees to do the same during the meeting in Vienna tomorrow. In the USA, California has declared at COVID-19 emergency while lawmakers have approved a bill worth US$ 8.3 Billion for combating virus outbreak. On release front today, the US calendar will see the release of initial jobless claims, Q4 NFP, Q4 Unit Labor Costs, and January Factory orders data while there is also a speech from BOE Carney, BOC Poloz and FED Kaplan in early North American market hours. 

Trading Perspective: Given broad-based risk-averse market mood, major USD matched global currencies are likely to trade rangebound with slight bearish bias in US market hours. The increased death toll in the USA and declaration of emergency in California point to the possibility of a sharp decline in Wall Street today. The decline of US futures in the European market also hint at a subdued opening in Wall Street as the trading session opens later today. 

Please feel free to share your thoughts with us in the comments below. 

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