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Awaiting Whether WHO Declares A Global Emergency Over The Coronavirus

Notes/Observations

  • Risk aversion and safe-haven flows dominate on coronavirus concerns;World Health Organization considered issuing a global alarm on China’s spreading coronavirus; India reported its 1st case of the coronavirus; WHO to hold
  • EU data continues to hint of stabilization taking root (higher YoY German inflation reading; better Euro Zone and German unemployment data)
  • Close call whether BOE cuts rates in Carney last meeting as gov

Asia:

  • China’s death toll from the coronavirus rose to 170 from 132 previously, while the number of cases on the mainland jumped to 7,711 – World Health Organization (WHO) spokesperson: decision to reconvene the emergency committee on Thursday, Jan 31st was based on the increased spread of coronavirus; to consider the merits of declaring a global public health emergency. So far 15 countries had reported cases of the coronavirus, but the whole world needed to be on alert and take action
  • BOK Official Yoon: Too early to say whether impact from virus should be addressed with policy rate cut; Too early to comment on impact from coronavirus on the economy and markets

Europe:

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  • Spain Catalan regional leader Torra calls snap election in a move to break the regional deadlock

Brexit:

  • EU Parliament passed the Brexit Withdrawal Agreement, clearing path for UK departure from European Union (as expected)
  • PM Johnson said to be prepared in upcoming speech to tell the EU he was prepared to accept post-Brexit border checks rather than allowing Britain to be a rule-taker

Americas:

  • FOMC left Interest Rates unchanged between 1.50-1.75% range in an unanimous vote (10-0) but raised the Interest Rate on Excess Reserves (IOER) to by 5bps 1.60% and extended repo ops at least through April
  • Fed Chair Powell post rate decision press conference noted that some uncertainties around trade had diminished recently and signs of global growth had stabilized; other concerns now included the coronavirus . change in wording around being ‘near’ inflation target was to make it clear that we are not comfortable with inflation consistently running below 2% target
  • President Trump sign the USMCA (as expected)
  • White House econ adviser Kudlow: intensity of EU trade discussions will restart soon
  • White House trade adviser Navarro said to push back against the idea that the US would remove tariffs on Chinese imports if the deadly coronavirus begins to weigh on China’s economy
  • Chile Central Bank (BCCh) left the Overnight Rate Target unchanged at 1.75%

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

  • Indices [Stotxx600 -0.65% at 416.70, FTSE -0.64% 7,434.89, DAX -0.87% at 13,229.51, CAC-40 -1.11% at 5,888.89, IBEX-35 -0.43% at 9,506.00, FTSE MIB -0.95% at 23,933.96, SMI -0.63% at 10,791.00, S&P 500 Futures -0.60%]
  • Market Focal Points/Key Themes: European indices in the red following Asia indices lower (Shanghai closed) and lower US futures. On a busy corporate earnings front, Royal Dutch Shell down after missing on bottom line; will continue $25B buyback program albeit subject to macro headwinds and debt reduction. Diageo down after guiding FY20 revenue towards lower end of prior range and Swatch as FY19 earnings missed on top and bottom line. British Telecom trading lower as Q3 earnings results came in below expectations. Siemens Gamesa plunges after reporting Q1 net loss and cutting FY20 guidance. Getinge and Orsted also down. Unilever up after FY19 earnings and initiation of strategic review of global tea business. Volvo jumps on strong Q4 results and proposes special dividend. Roche up following earnings and small dividend increase proposed. H&M rallying after strong Q4 results and CEO and Chairman change, Deutsche Bank also gains reversing earlier losses as the company posted a wider than expected loss. Wartsila, Svenska Cellulosa, Stora Enso, Safilo and DWS also trading higher today post earnings. Looking ahead notable earners today include AmerisourceBergen, Archer Daniels Midland, Alliance Data Systems, Ameriprise Financial, Apollo Global Management, Franklin Resources, Biogen, Blackstone Group, CMS Energy, CNX Resources, DowDuPont, Quest Diagnostics, Danaher Corp, Dover Corp, WW Graninger, Hershey Foods, International Paper, Coca-Cola, Eli Lily, Marsh & McLennan, Magellan Midstream Partners, Altria, MSCi, Murphy Oil, Northrop Grumman, Parker Hannifin, Resolute Forest Products, Raytheon, Sherwin-Williams, Sp