The S&P and the NASDAQ inked out fresh records in Tuesday’s session closing 0.17% and 0.11% higher respectively as investor optimism grew with signs of slowing in the spread of the coronavirus, now officially named Covid-19; the number of new confirmed cases slowed on Monday following a surge over the weekend. The DOW closed unchanged at 0.00% despite having set an intraday record during the session. Treasury yields were higher with 2Y and 10Y USTs closing at 1.4234% and 1.6006% respectively.
The UK economy stagnated in Q4 2019 compared to the previous quarter as political uncertainty in the build-up to Commons agreeing to Boris’ Brexit deal and subsequently leading to the December elections weighed on sentiment. True to the reduced uncertainty that accompanied the Tory victory in the elections, the economy picked up 0.3% in December in line with PMIs and several other indicators which showed improved sentiment post-elections. A statement by the Office for National Statistics noted that a poor showing in manufacturing, particularly the motor industry, offset increases in services and construction. Manufacturing dropped 1.1% QoQ with 11 of 13 industries considered declining. The pound closed higher at $1.2952 while yield on 10Y UKTs closed slightly higher at 0.569%.
Asian stocks were higher on Wednesday despite the continued uptick in fatalities as well as new infections associated with the coronavirus. The death toll within China pushed beyond 1,100 on Tuesday according to official data while confirmed cases are now over 45,000. Stocks largely cemented morning gains with the HANG SENG and the CSI both closing 0.87% higher while the NIKKEI rose 0.74%. The ASX however pared slightly to close 0.47% up after gaining 0.6% earlier in the session.
New Lebanese Prime Minister Hassan Diab’s government won a vote of confidence in a 63-21 vote in Parliament on Tuesday to the dismay of protestors who had gathered to protest against a vote of confidence passing. Diab’s government has its work cut out as the first of 3 Eurobonds maturing in 2020 is due for redemption early March and the premier said his government would draft a plan by the end of the month to address impending payments and the country’s economic challenges. Former Prime Minister Saad Hariri had asked the World Bank and IMF for assistance during his period as caretaker head of government but reports suggest that Speaker of Parliament Nabih Merri is against the idea of such packages as they would com with stringent conditions unacceptable to the Lebanese public. LEBAN 6 ⅜ 03/09/20 Corp, the impending maturity, was lower, trading in the low 84s.
IMF officials jet into Argentina on Wednesday for their first mission since President Alberto Fernandez’ term began with the Bretton-Woods institution keen to see the government’s plan for resuscitating the economy. The government has thus far let out very little regarding its plan to turn around an economy set to contract for a third straight year and with more than $320 million debt, the IMF wants to see the economic blueprint before agreeing to changing terms on the current deal with Argentina owing $44 billion already. Fernandez will be hoping officials will also harmonise with his rhetoric that the country’s debt is unsustainable as this would give the government more leverage to impose steeper losses on other creditors. The peso closed weaker at 61.1202 to the dollar while ARGENT 48s were lower, trading in the low 43s.
The ruble strengthen over 1% against the dollar on Tuesday, closing at 63.3777, as oil prices recovered from Monday’s low. The ruble’s recovery followed a 1.2% drop on Friday as oil prices remained depressed culminating in the $53.27 a barrel seen on Monday, the lowest since December 2018. Ruble government bonds were steady however with RFLB 30s slightly higher while RUSSIA 47s rallied over a point to trade in the low 131s.