Trade of the Day: Stocks and stock futures down; safe havens gold and US Treasuries gain; oil extends rally.
Quote of the Day: “We look for the pace of nonfarm hiring to slow in December, with employers adding 150,000 jobs. Although we expect the pace of hiring to slow, the unemployment rate should remain steady at its 50-year low of 3.5%,” said Wells Fargo economists in a report ahead of the US jobs data for December to be released this Friday.
Stock of the day: China Oilfield Services rose in a weak market after the company said a settlement of civil suits has been made in an Oslo court and the company would receive US$188 million as settlement. The stock rose 2% and volumes surged.
Number of the Day: $5 billion. Orders for a two-tranche bond from China Fortune Land logged within a few hours of issue announcement.
Tip of the Day: “In our base case of no major military escalation, the effects on economies and earnings on a global scale should be minor. Hence, we maintain our overweight positions on global and US equities. Outside a severe disruption scenario, we do not believe that oil prices can sustain at current levels. Spare capacity in oil remains adequate and we still expect an oversupplied oil market in 2020, particularly in 1H20, due to non-OPEC supply growth (by the US and Norway) outpacing modest oil demand growth,” said UBS Chief Investment Office in its report outlining the 2020 outlook. They also asked investors to take advantage of relatively low volatility in the option market to cut portfolio volatility or add explicit protection.
“Investors can consider adding exposure to safe-haven assets Japanese yen and gold. Regarding the yellow metal, muted US economic growth and lower real interest rates reduce the opportunity cost of holding gold. And, since gold is priced in US dollars, a weaker dollar, which we expect in 2020, supports gold prices,” the report said.
Financial markets retreated on Wednesday after Iran fired a series of rockets at two US-Iraqi airbases in retaliation against the US killing of Iranian military commander Qassem Soleimani. The build-up in tension has triggered a jump in oil prices and a scramble for safe-haven gold but the broad market is awaiting to see if this will escalate into a full-blown conflict.
Hong Kong’s Hang Seng index declined 0.8% with insurance, banking and industrials leading the losses. The Stoxx Europe 600 Index fell 0.2% but futures on the S&P 500 Index gained 0.1% after Iran’s foreign minister Javad Zarif tweeted that his country took and concluded proportionate measures in self-defense. “We do not seek escalation or war, but will defend ourselves against any aggression,” he said in his tweet.
China property companies continued their scramble for raising funds through bond issues with Yango International, Kaisa Group, Sino Ocean and China Fortune all in the market with debt offerings. In fact, China South City sold bonds due in 2024, buying back bonds that are falling due later this year, thereby extending its maturity profile by leveraging on the positive sentiment around the sector.
“We remain bullish on the China property sector on the back of macro policies such as the recent move to bolster bank liquidity, as well as real estate support,” said HSBC analysts in a report published on Wednesday.