Trade of the Day: Asian stocks eke out gains but US futures lower ahead of Fed; dollar and US Treasuries gain and oil slips
Quote of the Day: “Global growth appears set to bottom out. We expect world GDP growth to hold steady at 3.1% in 2020 but, beneath the surface, the expansion is a fragile one…. Following consolidation in 2020, we expect global growth to firm in 2021, rising to 3.3%, but it could quite easily crumble given its shaky foundations,” Nomura economists said in their 2020 economic outlook published on Wednesday.
Stock of the day: Saudi Aramco jumps 10% over its IPO price giving it a valuation of $1.9 trillion, making it the world’s largest listed company. It is just shy of the $2 trillion valuation coveted by Saudi Crown Prince Mohammed bin Salman after the oil monolith raised $25.6 billion last week in the world’s biggest IPO ever.
Number of the Day:. 1,999 yuan. The price of the new 5G mobile phone model unveiled by Xiaomi Corp, making it the cheapest 5G handset in the market. Xiaomi’s share price rose by 8.5% after the introduction.
Tip of the Day: “China’s headline CPI will likely approach 5% as Lunar New Year holiday is around the corner,” said Philip Wee, DBS strategist. “Given the subdued core inflation, the PBoC is likely to sustain its pro-growth policies in 2020. Monetary policy easing through a combination of the reserve requirement ratio and interest rate cuts is warranted. Such tactic however will likely exert downward pressure on the CNY exchange rate in the near term.”
Asian markets were broadly higher as investors digested various reports that suggested the United States and China were discussing how the proposed US tariffs on Chinese imports would be delayed. While both sides were sticking to their demands, they were also insisting the talks were going well and a deal would be in their mutual interest.
MSCI Asia-Pacific ex-Japan index gained 0.5% while the Nikkei dipped 0.1%. Hong Kong’s Hang Seng rose 0.8% with insurance, industrials and technology boosting the index.
But European stocks and U.S. futures were softer ahead of the Federal Reserve policy decision due on Wednesday; the market expects the US central bank to hold rates steady but the focus is on indications about its next move. Some direction may be provided by US inflation data, which may further reduce chances for rate cuts next year if they surprise on the upside.
Later in the week ECB President Christine Lagarde chairs her first meeting, which will make a strategic review of the central bank’s objectives and instruments where “every stone will have to be turned and every option will have to be examined.”