- Market Round Up:
- Yesterday, all eyes were on President Trump’s speech and subsequent discussion with Nato chief Rutte at the World Economic Forum in Davos, with markets rising after Trump said he wouldn’t use force in Greenland, and then further relief came as a framework for a Greenland deal was reached with NATO. Further details are yet unknown. The S&P and Nasdaq both closed c. +1.2%, whilst Europe ended flat.However real-world data from the US on Pending Home sales (-9.3% MoM December), Mortgage Applications (+14.1% w/e Jan 16th) and Construction Spending (+0.5% MoM) painted a mixed picture. In the UK the CBI Business Optimism index improved in January, House price increases accelerated in November to +2.5% YoY, and core CPI held at 3.2% YoY in December.US chip makers all rallied yesterday, Intel (+11.7%), AMD (+7.7%), Micron (+6.6%), WD (+8.5%) and Seagate (5.6%), as Nvidia CEO Jensen Huang talked up the need for trillions of dollars more in computing infrastructure spending.This morning in Asia, markets are relatively subdued with Tokyo up 0.7%, Hong Kong +0.1% and China flat. JGBs traded better this morning with yields 3.5~5.4bps lower at the long end and the Yen weakened. Ryanair’s CEO’s public spat with Elon Musk about Starlink appears to have helped drive sales for Ryanair and the shares rose 2% yesterday. Also, PTSB rose c. 2% on confirmation that it had received approval for its new IRB risk models.
- Day Ahead and Market Drivers: Equities: Economic data likely to impact the market today is the Continuing Claims and Initial Jobless Claims data for mid-January, where slight increases are expected. The health of US consumer spending should be evidenced by Personal Income and Spending data for November. Earnings releases from economic bellwethers such as GE, P&G and Capital One will give a view into the aerospace/industrial, consumer and consumer finance segments
- Bonds: Bond yields in Europe rose after the Trump speech yesterday, whilst US yields fell 5bps on mixed data. The key focus of the market today will be on the Core PCE Price Index changes for November, 2.8% YoY and 0.2% MoM are expected, which is stable with the prior reading. Also, the UK’s Public Sector Net Borrowing statistics released this morning was better than expected at 11.6bn versus 13.0bn expected. The French government is auctioning a range of long bonds this morning, and the US is to sell $21bbn of 10-year TIPS this evening.
- Commodities: Oil prices are a c. 30bps lower this morning after a quiet day (+0.46%) yesterday, whilst Gold is up only 12bps, after a three day rally this week so far. Silver continues its strong run rising 1.2%. The VIX volatility index closed down 15.8% yesterday following Trump’s speech and discussions in Davos
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