Today’s Stock Market News – Monday, 13 January, 2020

♦ Tech Sector Leads Stocks Higher ♦

StockMarketNews.TodayU.S. equities rose, led by shares of technology companies, in a week expected to be dominated by the start of earnings season and the signing of a partial China trade deal.

Apple, Tesla and Microsoft  pushed the Nasdaq Composite Index higher. The Stoxx Europe 600 swung from a gain to a loss, while major indexes in Asia closed higher. Earnings from some of the biggest U.S. banks kick off the season Tuesday, amid forecasts that overall corporate profits will show the smallest growth in three years.


“Our expectation is a solid earnings season — nothing extraordinary but nothing really terrible,” Kristina Hooper, chief global market strategist at Invesco, told Bloomberg TV. “The environment is so accommodative that it really is supportive of risk assets, including equities, even if we have a lackluster earnings season.”

The pound led declines among Group-of-10 currencies after another Bank of England official pointed to a potential vote for a U.K. interest-rate cut this month and data showed the economy unexpectedly shrank. Germany’s benchmark bund yield headed for least negative closing level since May. The offshore yuan strengthened past 6.9 per dollar for the first time since July.

The dollar edged higher and Treasuries fell across the curve as the completion of the first trade deal nears; President Donald Trump has said the U.S. and China will sign the accord on Wednesday.

“The consumer is super strong, the economy is strong, but slowing. The Fed’s on the sidelines. China’s on the sidelines now as a headline, and we dodged the giant bullet with Iran, no pun intended,” said Said Nancy Tengler, chief investment strategist at Tengler Wealth Management. “And so what you have is no news and everything is kind of OK.”

Elsewhere, equities advanced in all major Asian markets except Japan, where there’s a holiday, and Australia. Oil fluctuated after last week posting its steepest loss since July.

Here are some events to watch for this week:

> Phase one of the U.S.-China trade deal is set to be signed on Wednesday in Washington.
> The biggest American financial institutions kick off earnings season, including JPMorgan Chase (NYSE:JPM) & Co., Citigroup Inc (NYSE:C)., Wells Fargo (NYSE:WFC) &Co., Bank of America Corp (NYSE:BAC)., Goldman Sachs Group Inc (NYSE:GS)., Morgan Stanley (NYSE:MS) and BlackRock Inc (NYSE:BLK).
> The U.S. releases inflation data for December on Tuesday.
> The Fed’s so-called beige book is due on Wednesday.
> China GDP comes on Friday.

China’s Currency Extends 2020 Rally

StockMarketNews.Today — China’s currency has gained further momentum — wiping out the heavy losses it took over the summer — amid cooling tensions between Beijing and Washington. The renminbi rallied as much as 0.5 per cent against the US dollar, crossing the Rmb6.9 mark for the first time since August and bringing its rise for 2020 to nearly 1 per cent. Its climb in the early days of this year highlights the upbeat sentiment among global investors and cautious optimism of an improvement in relations between the world’s two biggest economies.

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The currency in August faced its worst sell-off in a quarter century and eventually slumped to nearly 7.2 to the US dollar in a fall that ricocheted across world markets. Traders and investors closely watch the currency as a broader market bellwether to which movements in many other assets are often closely tied, according to analysts.

Equities were indeed broadly higher in Asia on Monday, with China’s benchmark CSI 300 index and Hong Kong’s Hang Seng both closing about 1 per cent higher, while in London the FTSE 100 notched a again of 0.4 per cent in morning trading.

The gains on Monday came days before the planned signing of a trade pact in Washington by US and Chinese officials, scheduled for Wednesday, that will help lock in the terms of a limited agreement reached last month. Although details on further concessions by both sides are scarce, the signing will at least prevent further levies on Chinese imports from being introduced by the US, which will also halve tariffs on $120bn of imports imposed in September.

The renewed strength for the renminbi on Monday was despite broad stability for the greenback, with the dollar index that tracks the US currency against a basket of peers essentially flat on the day. The offshore renminbi, which is not bound by the Chinese central bank’s trading band, was also back below the Rmb6.9 per dollar mark, having firmed 0.2 per cent on Monday to 6.8947.

“Obviously the market is focused on the phase one agreement,” said Mansoor Mohi-uddin, senior macro strategist at NatWest Markets, pointing to renewed strength in both the onshore and offshore rates since markets opened in 2020.

China’s central bank has been setting its daily midpoint level around which the currency is allowed to fluctuate gradually firmer since the trade truce was announced around a month ago. Still, the currency is about 7.5 per cent weaker compared to its level shortly before the first tariffs were imposed by the US in June 2018.

Plans by the administration of President Donald Trump for a new forum for economic dialogue with China helped to reinforce that message with the prospect of a return to the strategy of engagement preferred by previous US presidents.

But Mr Mohi-uddin added that short-term seasonal factors were partly behind the Chinese currency’s early hot streak.

Chinese corporations with dollar holdings, he said, often sold these to buy more renminbi at the start of the year in order to pay bonuses to workers ahead of the Chinese new year, which occurs later this month.

“That’s occurring now and helping push the dollar down against [the renminbi] irrespective of trade talks,” he said.




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