Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

New UBS Boss; China Stocks Rally After Rates Cut (Again); Aussie Plummets

By London Capital Group (Jasper Lawler)Market OverviewFeb 20, 2020 08:22
uk.investing.com/analysis/new-ubs-boss-china-stocks-rally-after-rates-cut-again-aussie-plummets-200438225
New UBS Boss; China Stocks Rally After Rates Cut (Again); Aussie Plummets
By London Capital Group (Jasper Lawler)   |  Feb 20, 2020 08:22
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

China has cut its benchmark lending rate: China 1-year Loan Prime Rate (LPR) cut to 4.05% and 5-year to 4.75%. Markets mostly shrugged off stale Fed minutes.

Coronavirus: 114 news deaths, 394 new cases is down from 1749 yesterday but China has again changed its methodology for diagnosis and is excluding using CT scans. The actual number of cases is unknown according to China's Global Times.

INDICES

European indices have opened on a slightly softer note, backtracking from a big up day. European shares had already been pricing in the extra Chinese stimulus efforts so are looking ahead to the release of accounts of the latest ECB meeting later.

Across Asian markets China was a clear out-performer thanks to the fresh stimulus measures. The Shanghai Composite rose 1.3% but we'd view Chinese government bond yields hitting a 4-year low as a better gauge of the markets view of the risks at hand. S&P ratings has predicted a worst-case scenario in which China grows 4% in 2020. The result of cheap credit and lower growth in China will be more non-performing bank loans. Chinese banks will be in a much weaker position to lend if the economy recovers and at greater risk in a more serious downturn.

The Nikkei 225 was higher by just 0.34%. The yen plunging to a 9-month low hasn't benefitted Japan as much as one might have thought. We think recession risk is bearing on both Japanese asset classes.

The S&P 500 and Nasdaq both closed at record levels on Wednesday. The Nasdaq was led higher by Tesla (+6.8%). The Nasdaq had been up over 1% but backed off into the close. Goldman Sachs (NYSE:GS) has echoed comments we made yesterday that markets are under-pricing the risk of the coronavirus.

EQUITIES

Ralph Hamers will replace Sergio Ermotti as the next head of UBS (NYSE:UBS). The appointment is quite rapid by contrast with typical bank succession planning standards. Bank executives often line up their replacements years in advance. There might be some concern that UBS has been a bit hasty. Ermotti will be a hard act to follow, having made UBS the world's largest wealth manager despite the changing landscape for Swiss bank transparency.

FOREX

The Fed took a more optimistic outlook in the latest meeting minutes but there was no material shift in communication or substantial details on the policy review, where results are expected mid-year. The shoot up in the number of coronavirus cases, Powell's subsequent testimony and the improved US data all served to make the minutes rather stale.

The Aussie dollar is under renewed pressure after Australian unemployment rose more than expected to 5.3% versus 5.2% exp and 5.1% prior. AUDUSD is down at 2009 lows. The RBA sounded hesitant about cutting interest rates because they are already so low but if trade and coronavirus uncertainties start to show up in the labour market then they may need to get off the fence.

The day ahead sees UK retail sales and ECB meeting accounts.

COMMODITIES

Gold reached its highest since 2013 on Wednesday. The yellow metal is holding its own at 1611 per oz, the high from January after the Soleimani drone strike. Our best assumption is that the breakout holds and that prices move in the direction of 1650 per oz in fairly short order.

Opening Calls

S&P 500 is set to open 2 points lower at 3384

Original Post

New UBS Boss; China Stocks Rally After Rates Cut (Again); Aussie Plummets
 

Related Articles

New UBS Boss; China Stocks Rally After Rates Cut (Again); Aussie Plummets

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email