General, Forex

Week Ahead market preview: Coronavirus continues to dominate

George Walker, Thursday, 6 February 2020

At this time of year, market chatter is typically dominated by corporate earnings. This year however, newswires have been filled with the new coronavirus originating in China. The reason why investors and traders have been ‘on tenterhooks’ with updates on the subject is due to the economic powerhouse that is China. International trade with China is massive and any potential disruptions or drop in demand could have a huge impact on the global economy, hence the concerns. Markets need little reason to sell off when trading near record highs, and it appears investors are very prepared to adopt a risk-off approach if needed. Corporate earnings and fundamental economic data have somewhat limited the downside, as well as hopes that the coronavirus' worst days are behind it - providing enough optimism to see markets recover. Traders will need to be conscious of the recent aggressive moves when taking positions long or short, particularly when holding positions overnight.

As well as developments on the coronavirus, macroeconomic data could also be pivotal over the coming week as we get inflation data from China, Switzerland, New Zealand, Australia, Germany and the United States. Inflation has been one the main reasons for central banks amending and reviewing current monetary policy so traders will be using this to gauge whether future changes could start to be priced in if there are any surprise changes in inflation figures. The Reserve Bank of New Zealand update the markets with their interest rate decision in the early hours of Wednesday morning, however, the following press conference could be more important to watch to see the potential short0term impact the coronavirus might have on trade and the economy. On the same subject, on Friday, a greater focus than normal will be on the National Bureau of Statistics press conference in China who are in charge of statistics and economic accounting in the world’s second largest economy. Will there be a clearer picture painted of the effects the now infamous virus is having on China itself?

GBP could be in focus on Tuesday morning when Gross Domestic Product data is released. The pound has been reacting positively to better than expected data since the Bank of England Governor Mark Carney mentioned they are prepared to promptly cut interest rates in the face of an economic downturn. The BoE held off from cutting rates last time out and traders will want to see if GDP data post the UK election continues to pick up or weakens in order to try and second guess the central bank’s next move.

Although the majority of US companies have now reported, corporate earnings continue to flow next week and there are still a few worth noting including influential results from the UK still yet to be announced. From the US, Pepsico, NVIDIA and ecommerce giant Alibaba will be watched to see if positive results can continue to provide investor confidence to offset concerns over the impact of the ongoing coronavirus. An interesting one to watch could be Barrick Gold Corporation. Since the takeover of Randgold Resources, Barrick Gold have become one of the world’s largest gold mining companies. Over the past six months, gold has been holding in and around 6 ½-year highs. Will we see the price increase in the precious metal reflect in Barrick’s results or have investors and analysts already priced this in?

On the other side of the pond in the UK, Barclays and Royal Bank of Scotland are the first of the mainstream banks to announce results. Prior to the recent UK election in December, uncertainty surrounding the UK’s departure from the European Union may well have hindered performance so focus could be on forward guidance and whether they adopt a confident stance for 2020. The banking sector is particularly susceptible to collective fluctuation so traders will need to be mindful when hold positions in rival UK listed banks in case of read across volatility. We also get results from Centrica and pharmaceutical giant AstraZeneca.

All times indicated are GMT.


ECONOMIC CALENDAR (all times are GMT)

Monday, 10 February

01:30 CNY Consumer Price Index

06:45 CHF Unemployment Rate

07:30 CHF Consumer Price Index

07:30 CHF Producer Import Prices

08:00 CNY FDI – Foreign Direct Investment

09:30 EUR Sentix Investor confidence

13:15 CAD Housing Starts

14:30 CAD Building Permits

UK Company Announcements:

N/A

US Company Announcements:

Itau Unibanco Banco Holding SA

Restaurant Brands International Inc

 

Tuesday, 11 February

00:30 AUD Home Loans

00:30 AUD Investment Lending for Homes

00:30 AUD National Australia Bank’s Business Conditions

00:30 AUD National Australia Bank’s Business Confidence

02:00 NZD RBNZ Inflation Expectations

09:30 GBP Industrial Production

09:30 GBP Manufacturing Production

09:30 GBP Gross Domestic Product

11:00 USD NFIB Business Optimism Index

13:55 USD Redbook Index

21:30 USD API Weekly Crude Oil Stock

23:30 AUD Westpac Consumer Confidence

UK Company Announcements:

TUI AG

US Company Announcements:

Dominion Energy Inc

Hilton Worldwide Holdings Inc

 

Wednesday, 12 February

01:00 NZD RBNZ Interest Rate Decision

01:00 NZD RBNZ Rate Statement

01:00 NZD Monetary Policy Statement

02:00 NZD RBNZ Press Conference

10:00 EUR Industrial Production

15:30 USD EIA Crude Oil Stocks Change

19:00 USD Monthly Budget Statement

23:50 JPY Producer Price Index

UK Company Announcements:

Plus 500

Dunelm

US Company Announcements:

Csco Systems Inc

CVS Health Corporation

CME Group

Global Payments Inc

Shopify Inc

Applied Materials Inc

Equinix Inc

Moody’s Corporation

Barrick Gold Corporation

Sun Life Financial Inc

 

Thursday, 13 February

00:00 AUD Consumer Inflation Expectations

00:15 AUD RBA’s Governor Lowe Speech

07:00 GER Consumer Price Index

07:00 GER Harmonised Index of Consumer Prices

10:00 EUR Employment Change

13:30 USD Initial Jobless Claims

13:30 USD Continuing Jobless Claims

13:30 USD Consumer Price Index

13:30 USD Consumer Price Index Core

13:30 USD Consumer Price Index ex Food & Energy

13:30 CAD New Housing Price Index

15:30 USD EIA Natural Gas Storage Change

21:30 NZD Business NZ PMI

UK Company Announcements:

Barclays

Centrica

Coca-Cola HBC

Gem Diamonds

Indivior

Relx

Safestore

US Company Announcements:

Alibaba Group Holding Limited

Pepsico Inc

NVIDIA Corporation

Duke Energy Corporation

 

Friday, 14 February

02:00 CNY NBS Press Conference

02:00 CNY Industrial Production

02:00 CNY Retail Sales

07:00 GER Gross Domestic Product (Preliminary)

09:30 GBP Retail Sales

09:30 GBP Retail Sales ex-Fuel

10:00 EUR Trade Balance

10:00 EUR Gross Domestic Product (Preliminary)

13:30 USD Import Price Index

13:30 USD Export Price Index

13:30 USD Retail Sales

13:30 USD Retail Sales ex Autos

13:30 USD Retail Sales Control Group

14:15 USD Industrial Production

15:00 USD Michigan Consumer Sentiment Index

15:00 USD Business Inventories

18:00 USD Baker Hughes US Oil Rig Count

UK Company Announcements:

AstraZeneca

Royal Bank of Scotland

Segro

US Company Announcements:

Enbridge Inc

 

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