- Despite announcing a loss of 4 cents per share Snap shares soared in after-hours trading as the social media giant beat analysts expectations, the general consensus was that the company would report a net loss of 8 cents per share in Q4.
- Disney also beat expectations aided by the launch of its streaming service ESPN+ and sales increases in its theme park businesses, earning per share came in at $1.84 vs $1.55 expected.
- The Dow rose by 172 points, followed by a 0.47% increase in the S&P fueled by gains in the communication services and technology sector. The Nasdaq also saw a gain of 0.7% and closed at 7,402.
- President Trump announced on Tuesday that he will meet with Kim Jong Un in Vietnam at the end of February. Although progress has been made, the president believes a lot of work still needs to be done.
- Overall, we saw a largely subdued session in the Asian market due to the Lunar New Year holidays, with the exception of moves in the Australian markets. The Australian dollar fell by almost 1.3% against USD as the Reserve Bank of Australia said that rates could fall if unemployment increases and inflation stays too low.
- Gold slipped to $1,314.30 per ounce, a 0.1% drop from its previous close.
Asian overnight: A somewhat subdued session overnight saw marginal gains in the ASX 200 and the Nikkei, while the Topix lost ground. Chinese and Hong Kong markets remained closed for the Lunar bank holidays. The Australian dollar was the big mover overnight, after the RBA governor Lowe signaled that the next move could be to cut rates rather than raise them. Meanwhile, Donald Trump’s state of the union address provided little of note for markets, with the President focusing on further promises to build a wall rather than laying out solutions to the impasse in US-China trade negotiations.
UK, US and Europe: Trump addressed Congress during his second State of the Union on Tuesday night, announcing that he will meet the North Korean leader between the 27th - 28th of February. The two leaders met last year in Singapore which, according to Trump, was a huge success as he claimed that North Korea's nuclear weapons were no longer a threat to the US. In his address he acknowledge that there is still a lot of progress that needs to be made between the two countries, but claimed that "If I had not been elected President of the United States, we would right now, in my opinion, be in a major war with North Korea".
Looking ahead, the early release of German factory orders represents the sum total of a quiet European session. Meanwhile, US trade balance, alongside US crude inventories provide the only major releases to watch out for in the afternoon.
South Africa: US Index futures are pointing to a flat start to the day. The Shanghai Composite and Hang Seng Index are closed this morning on account of Lunar Holidays being celebrated within the region. With market moves minimal this morning there appears to be little in the way of scheduled news data to guide markets for the rest of the day. Commodity prices are relatively unchanged this morning and the rand trades at similar levels to where it closed yesterday. The BHP Group is up 1.67% higher in Australia suggestive of a positive start for local miners.
Economic calendar - key events and forecast (times in GMT)
Source: Daily FX Economic Calendar
1.30pm – US trade balance (November), GDP growth (Q4 preliminary): trade deficit to narrow to $54 billion from $55.5 billion, and GDP expected to grow by 2.6% QoQ, from 3.4%. Markets to watch: US indices, USD crosses
3pm – Canada Ivey PMI (January): previous reading 59.7. Market to watch: CAD crosses
3.30pm – US EIA crude inventories (w/e 1 February): stockpiles rose by 919,000 a week earlier. Markets to watch: Brent, WTI
Corporate News, Upgrades and Downgrades
- Apple has announced its retail chief, Angela Ahrendts, is set to leave the company in April citing "new personal and professional pursuits" as the reasoning behind her move away from the tech giant.
- Toyota cuts it net income outlook for 2019 due to "changes in US taxation rules" and "losses from equity sales".
- Severn Trent still expects to report full-year performance in line with forecasts, with its biggest capital spending plan in a decade on track.
- Redrow said that pre-tax profit rose 5% to £185 million for the first half, while revenue rose 9% to £907 million. The dividend was raised by 11%, to 10p per share, while a cash payment of 30p per share will also be paid.
- Victrex suffered an 18% fall in first quarter revenue, due to weakness in the automotive and consumer electronics markets. The firm said that it had seen some improvement in January and February.
- Profits at Daimler, the owner of Mercedes-Benz, decreased by nearly a third last year as earnings came in at €7.6bn down from €10.6bn previously.
- Interserve has announced this morning that they have reached a deal with creditors to cut its debt by issuing new shares through a rights issue, indicating that it will reduce liabilities by around £325m
Alstria Office upgraded to buy at Kempen
BP upgraded to buy at DZ Bank
National Grid upgraded to outperform at RBC
Paddy Power upgraded to hold at HSBC
EON downgraded to underperform at Jefferies
LVMH downgraded to hold at Jefferies
Royal Mail downgraded to sell at SocGen
TUI downgraded to hold at HSBC
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