Finance Update – A $40 Barrel?

Asia

The Chinese government eased some coronavirus-related restrictions this morning, enabling workers to begin returning to work.

Chinese indexes are slightly higher this morning after January’s Consumer Price Index surprised nicely to the upside, adding 1.4% MoM – an 8-year high (measured before the Corona outbreak).

On Friday, China’s trade surplusA trade balance that is positive as a result of income (exports on the national level) being greater... fell less than expected to $39 bn on a 2% increase in exports to 9.1%, while Japan’s trade balanceThe difference in value between a country’s imports and exports. If a country exports more than it... moved from a 2.5bn yen deficitA trade balance that is negative as a result of cost (imports, on the national level) being greater ... in December to a 120bn yen surplus in January. The Nikkei this morning is down 0.6%.

Meanwhile, Japanese State Economics Minister Kozo Yamamoto told Reuters Friday that Japan expects to instate a digital yen within 2 to 3 years.

Further south, the Australian dollar rallied by 30 pips overnight as rains wash the Eastern seaboard, extinguishing months’-long bushfires, but wreaking storm havoc.

Europe

European indexes also ended the week in the red, Friday. France and Germany’s trade balances improved in December, the former dropping to a €4.05 bn deficit while the latter’s surplus rose to a seasonally adjusted €19.2 bn, all resulting in a brief respite for the Euro’s week-long downtrendA chart pattern showing diminishing value and confirmed by sequentially falling highs and lows..

UK housing prices increased by 4.1%, an improvement over December’s even 4, pushing the GBP up by 20 pips against the dollar. Still, the nation isn’t quite out of the Brexit doldrums yet as Sinn Fein wins a 24.5% victory in Northern Irish parliamentary elections.

Sinn Fein’s goal of a united Ireland would place the island on par with Scottish sentiment, running against the Brexit-lorn UK.

Americas

US President Donald Trump is expected to propose a 21% cut in foreign aid, social programs and more in his 2021 budget proposal while diverting funds to infrastructure and defence projects.

US indexes ended down between half and 1 percent Friday, as earnings season enters its final wave. Last week’s NFP surprised with a 225K addition in January, up from 147k in December.

Earnings rose to 3.1% and the participation rate also added to ticks to 63.4%. Unemployment in Canada on Friday also improved to 5.5% while the Ivey PMI increased to 57.3 – a 6-point increase. Later today – housing starts, which are expected to rise to 210K in January.

Commodities

Despite rising tensions between Syria and Turkey in Idlib, oil this morning continues south as traders try to assess Corona-related demand in China.

OPECC+ awaits Russia’s decision to abide by proposed additional production cuts, as US production continues to increase. Friday’s Baker Hughes rig count saw an additional well put online.

S&P analyst Claudia Carpenter on Sunday told the Global CommodityA tangible good that can be and which has been “commoditized”, i.e. standardized by quality and ... Outlook conference in Dubai that she expects oil to drop towards the $40 level within weeks.

Bitcoin briefly crossed the 10k mark overnight before dropping sharply back into the 9k region. Still, January saw a 30% increase in value – its best month in 7 years.

Crypto-exchange owner Vijay Ayyar attributes the improvement to the Coronavirus outbreak, which has stifled Chinese exports, strengthening the bitcoin-based black marketA location or entity where people and entities can negotiate and trade assets of value..

Corporate

Nvidia, PepsiCo, Beyond Meat and Cisco are amongst the major US companies delivering earnings reports this week.

On Tuesday, Daimler will report to the Deutsch Bourse after releasing news that it would fire 15,000 workers over the coming year – this following 2 earnings warnings issued over the past month.

Twitter announced this morning that Facebook’s Twitter account had been hacked.

Events