WEEKLY MARKET REPORT

Coronavirus concerns weigh on risky assets.

By the end of the week, approximately 14,000 cases had been reported and at least 304 deaths, the World Health Organization (WHO) had declared the outbreak a global health emergency. However, the WHO did not recommend any travel or trade restrictions, though the Chinese have imposed extensive travel barriers. U.S. State Department had issued a warning for U.S. citizens to avoid traveling to China . Fears of the spreading coronavirus have knocked global stock markets over the past week. Transport, tourism, retail and luxury stocks have been at the frontline. 

Eurozone growth slowed sharply. 

The Eurozone economy grew at a slower-than-expected rate in Q4. GDP rose 0.1% q/q and 1.0% y/y, slightly below the consensus estimate. France’s economy shrank by 0.1% as nationwide strikes over Macron’s pension reforms dragged down growth, while Italian GDP contracted 0.3%, marking the worst performance since early 2013, amid weaker domestic demand for goods and services. On the contrary, Spain logged an expansion over Q4, as growth rose slightly to 0.5%, driven by a stronger export performance. 

The week ahead. 

US earnings, US and Canada employment data, RBA meeting, trade balances across the globe, the ISM manufacturing PMI from US, and services PMIs from Eurozone, UK and US will dominate the market.

The key event for the week will be employment numbers for January. Nonfarm payrolls are expected to reach 156k, slightly higher than the 145k in December, and a number consistent with further tightening in the jobs market. The unemployment rate is forecast to remain steady at 3.5%, while average hourly earnings are projected to accelerate slightly to 3.0% on a yearly basis, from 2.9% previously.

Reserve Bank of Australia will likely keep rates unchanged, but we should expect a dovish guidance. Recent data have been solid enough to dispel market expectations for an immediate rate cut to support the economy. However, new risks have emerged, including the raging bushfires and the coronavirus epidemic.

On the corporate front, investors await results from 96 companies listed on the S&P 500, including General Motors, Alphabet, Walt Disney, Gilead Sciences, Merck&Co, Spotify, Yum! Brands, Tableau Software, Phillip Morris. Ralph Lauren, Twitter, Qualcomm, AbbVie, T-Mobile, Baidu, Activision Blizzard, Uber Technologies, Tyson Foods, Estee Lauder and News Corp among others. In Eurozone, earnings results from GlaxoSmithKline, L’Oreal, BP, Sanofi will the most notable. Releases. 

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