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S&P and NASDAQ closed at record levels. Major indices go out near highs

  
Analysis, US Market
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NASDAQ index rises by 1.13%

The NASDAQ juggernaut has continued with the index rising by 107.87 points or 1.13% on the day. For the year the index is now up over 7%.
Both the NASDAQ and the S&P closed at record levels today. The Dow industrial average is still short of its all-time record.
The final numbers are showing:
  • S&P index +24.38 points or 0.73% at 3352.09. The high price reached 3352.26. The low extended to 3317.77.
  • NASDAQ index +107.87 points or 1.13% at 9628.39. The high price reached at 9628.66. The low extended to 9493.62.
  • Dow industrial average +174.31 points or 0.60% at 29276.82. The high price reached 29215.00. The low extended to 28850.00

Some of the big winners on the day included:

  • Slack, +15.44%.
  • Lyft, +7.41%
  • AMD, +5.09%
  • Nvidia, +4.51%
  • Chipotle, +3.09%
  • Tesla, +3.06%
  • Amazon, +2.63%
  • Microsoft, +2.59%
  • Boeing, +2.35%
  • Alphabet, +2.00%
  • Cisco, +1.90%
  • General Motors, +1.84%
  • Tencent, +1.8%
  • Square, +1.7%
  • Visa, +1.64%
  • Home Depot, +1.39%
Some of the underperformers during today’s trading day include:
  • Twitter, -2.89%
  • Exxon Mobil, -2.47%
  • DuPont, -1.48%
  • Charles Schwab, -1.14%
  • Walmart, -1.03%
  • Deutsche Bank, -0.96%
  • United health, -0.76%
  • Pfizer, -0.63%
  • Emerson, -0.52%
  • AliBaba, -0.38%

EUR/CHF threatens a three-year low as some risk aversion creeps in

  
Analysis, Forex
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The euro is soft on all fronts

The euro is the laggard today as the pain trade continues for euro bulls.
EUR/CHF is no exception as the pair threatens the low of the year at 1.0663. We’re just 5 pips from there now and if that breaks, the next big support level is the 2017 low of 1.0632.
The euro is soft on all fronts

More risk aversion is creeping in today as the minutes tick by. Stocks in the US are holding up but Treasury yields are sliding and gold is climbing.

Fed: Downside risks eased in late 2019 but virus is a new threat

  
  Analysis
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Comments in the semi-annual monetary policy

  • US economy grew moderately last year
  • Labor market strengthened further and inflation continued to run below target
  • Probability of recession in the next year has ‘fallen noticeably’ in recent months
  • Downside risks seem to have receded in late 2019 due to decrease in trade tensions
  • Global slowdown in manufacturing and trade appears to be nearing an end while consumer spending and services activities continue to hold up
  • Possible virus spillovers present a new risk
  • Asset valuations and business debt are elevated; leverage in the financial sector appears low by historical norms
  • Fragilities in the corporate and financial sector in China are a risk
  • Market conditions were quite calm around year end after added liquidity
There’s nothing groundbreaking here.

Treasury yields turn flat across the curve, risk currencies pare gains

  
  Analysis
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10-year Treasury yields are now flat on the session

USGG10YR

The early trading in the bond market is hinting at some indecision about the risk mood. Treasury yields turned flatter about two hours ago before recovering some poise and is now back to flat levels again on the session.
As a result, USD/JPY has pared gains to 109.81 currently and we are seeing a similar story for the aussie as AUD/USD falls to a session low of 0.6743 after having traded around 0.67455-65 earlier in the day – just take note AUD/JPY is at key resistance levels as well.
European equities have pared back some of its earlier gains too but are still keeping higher in trading so far. This may yet lead to some mixed tones between stocks and bonds again but just be mindful of the market saying that “the bond market is always right”.

US Indices add to their gains. Nasdaq/S&P close at record levels

  
Analysis, US Market
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S&P just misses making a new all time intraday high today (short by $0.19)

The US stocks are closing up for the 3rd day in a row.
The NASDAQ index is closing at a session high and reached an intraday all-time high of 9574.936.
The S&P index reached a high price of 3337.58. That was just short of the all-time high price of 3337.77. So it was just short of that level. However, it is closing at an all-time record high taking out the previous high from January 17 at 3329.62.
The Dow is still below its all-time high, but it was the biggest mover today.
The levels at the close are showing:
  • S&P index +37.13 points or 1.13% at 3334.71
  • Nasdaq index +40.71 points or 0.43% at 9508.68
  • Dow up 483.09 points or 1.68% at 29290.73
Big winners for the day included:
  • Chubb, +7.06% the
  • Unitedhealth, +5.31%
  • IBM, +4.85%
  • Exxon Mobil, +4.64%
  • Emerson, +3.85%
  • United Airlines, +3.7%
  • Boeing, +3.66%
  • Bank of America, +3.24%
  • 3M, +3.21%
  • Chevron, +3.21%
  • travelers, +3.14%
  • Citigroup, +3.08%
  • Caterpillar, +2.89%
  • Intel, +2.89%
  • DuPont, +2.64%
  • Charles Schwab, +2.48%
  • General Dynamics, +2.47%
Losers today the included:
  • Tesla, -17.04%
  • Ford Motor, -9.54%
  • Lyft, -3.82%
  • Chipotle, -3.5%
  • Square, -3.07%
  • Walt Disney, -2.35%
  • Gilead, -2.28%
  • Twitter, -1.77%
  • Chewy, -1.65%
  • AliBaba, -1.21%
  • Starbucks, -0.93%
  • Amazon, -0.52%
  • Tencent, -0.45%

Ahead of markets in China opening for Wednesday – support measures so far and here is what is still to come

  
  Analysis
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Nomura provide a summary of the market-supporting actions out of China (these have been discussed on ForexLive in prior days this week but this a nice summary)

PBOC:
  • cut the OMO rate by 10bps for both 7 and 14 day RRs
  • Monday PBoC injected CNY 2.1tln of short-term interbank liquidity (maturing loans offset some of this)
  • Tuesday the PBoC injected a further CNY net 00 bn yuan in RRs – largest single-day addition since January 2019
CSRC:
  • suspended securities lending from Monday until further notice
  • some funds were told to avoid actively selling stocks
    prop traders at brokerages told they were not permitted to be net sellers of equities this week
    would halt night sessions for futures trading
  • to allow some share pledge contracts to be extended by as long as six months
MoF:
  • an interest subsidy scheme for new loans ear-marked for medical supply companies fighting coronavirus
  • policies to extend loans to entrepreneurs and SMEs which have been hit by the coronavirus
They go on with what is still expected to come:
PBOC expected to cut RRR by 50 to 100bp
  • more MLF operations and OMOs coming (to inject long & short-term liquidity into the banking system)
  • MLF rate cut (by 10bps) – to be relfected in the February Loan Prime Rate (on the 20th)
Other:
  • tax/fee cuts, waivers
  • boost to u/e and insurance benefits to people who have lost income or been infected with the virus
  • higher fiscal deficits
  • local governments to get more flexibility in easing restrictions on the property sectors

Pres. Trump is weighing exiting from WTOs $1.7 trillion procurement pact

  
Analysis, Politics
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Pres. Trump on WTO procurement pact

The WTO procurement pactregulates the procurement of goods and services by the public authorities of the parties to the agreement, based on the principles of openness, transparency and non-discrimination.

The aim of the Agreement is to mutually open government procurement markets among its parties, consistent with principles of reciprocity. There are 48 nations in the pact.
The government procurement agreement (GPA) parties opens procurement activities worth an estimated USD 1.7 trillion annually to international competition (i.e. to suppliers from GPA parties offering goods, services or construction services).

China cuts rates

  
  Analysis
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China cuts rates on reverse repos

  • the rate on 7-day reverse repos goes to 2.4% from previously at 2.5%
  • on 14-day RRs goes to 2.55% from 2.65%
This is part of stimulus efforts to combat the negative economic impact of the coronavirus outbreak and spread.
There was a big injection of funds today (but there is a but):
  • 900bn yuan added via 7 day RRs
  • 300bn via 14-dayers

China will limit short-selling on market reopen on Monday

  
  Analysis
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China will not allow short selling on their stock markets when they reopen for trade on Monday 3 February 2020

The information comes via unnamed sources cited at Reuters . saying China’s regulator (China Securities Regulatory Commission (CSRC)) had issued a verbal directive to brokerages to not permit clients selling borrowed stocks.
  • It was not clear if the suspension – which was first reported on Sunday by Chinese media outlet 21st Century Business Herald – would be extended beyond Monday, one of the sources said.
Over the weekend Adam outlined various other stabilisation measures being taken in China:
  • China unveils economic measures in effort to promote calm with markets set to re-open
On the PBOC cash injection, its not as big as it seems:
  • PBOC to inject cash funds today
Its going to be an “interesting” welcome to the new year for financial markets in China today.

China is closing gap with United States on research spending

  
  Analysis
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China’s central bank said it will inject 1.2 trillion yuan ($173.8 billion) worth of liquidity into the markets via reverse repo operations on Monday, as the country prepares to reopen its stock markets amid a new coronavirus outbreak.

China’s authorities have pledged to use various monetary policy tools to ensure liquidity remains reasonably ample and to support companies affected by the virus epidemic, which has so far claimed 305 lives, all but one in China.

The People’s Bank of China made the announcement in a statement published on its website on Sunday, adding the total liquidity in the banking system will be 900 billion yuan higher than the same period in 2019 after the injection.

According to Reuters calculations based on official central bank data, 1.05 trillion yuan worth of reverse repos are set to mature on Monday, meaning that 150 billion yuan in net cash will be injected.

Investors are bracing for a volatile session in Chinese markets when onshore trades resume on Monday after a break for the Lunar New Year which was extended by the government.

China’s stock, currency and bond markets have all been closed since Jan. 23 and had been due to reopen last Friday. (more…)

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