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Breaking financial world news from 23 January, 2020.

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OECD unemployment remains at 5.1% The OECD unemployment rate was reported at 5.1% in November, unchanged for the third straight month, the organization said in a recent report. Notably, this represents the lowest reading since April 1998, when the OECD started tracking the indicator. This number of unemployed in OECD member countries totaled 33.024 mn in November compared to 33.087 mn in October. In the Eurozone, the unemployment rate also remained unchanged m-o-m at 7.5% in November 2019. Unemployment rates decreased in Austria (by 0.2 pps to 4.2%), France (by 0.1 pp to 8.4%), Slovenia (by 0.1 pp to 4.6%) and Spain (by 0.1 pp to 14.1%), while increasing in Latvia, Portugal and Belgium. In Germany, the unemployment rate was flat m-o-m at 3.1%. In the OECD area, decreases in unemployment were reported for Japan (by 0.2 pps to 2.2%), Mexico (by 0.1 pp to 3.5%) and the US (by 0.1 pp to 3.5%), while increases were recorded in Canada (by 0.4 pps to 5.9%), Israel (by 0.4 pps to 3.9%) and South Korea (by 0.1 pp to 3.6%). OECD youth unemployment (among those aged 15 through 24) contracted to 11.1% compared to 11.3% in October.

US existing home sales up in December Existing home sales in the US jumped 3.6% m-o-m to an annual rate of 5.54 mn, the National Association of Realtors (NAR) said in a report. This the highest figure in nearly two years, since February 2018. Historically low interest rates continue to attract real estate buyers, although inventories remain at a record low level, experts point out. Existing single-family home sales grew 2.7% to 4.92 mn in annualized terms, while sales of multiple-family homes (including townhouses and condominiums) jumped 10.7% to 620,000. The median home price increased 7.8% y-o-y to USD 274,500 in December. As of late December 2019, US home inventory stood at 1.40 mn, down 14.6% on the month. Given the pace of December sales, it would take just three months to sell them vs. 3.7 months in November. The six-month period is considered to show that the market is balanced, and any number below five months implies market tension.

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Japanese exports and imports fall in December Japan’s exports declined 6.3% y-o-y to JPY 6.58 tn, official data show. The contraction extended into the thirteenth straight month amid weak demand overseas. Automobile, spare parts and transport equipment exports decreased by 11.6%, 10.9% and 10.7%, respectively. Of its major trade partners, Japanese shipments to South Korea, Thailand, the US and Europe declined by 16.2%, 15%, 14.9% and 5.6%, respectively. Exports to China rose 0.8%. Japanese imports dropped 4.9% to JPY 6.73 tn in December. Japan’s trade surplus jumped from JPY 55.7 bn in November to JPY 152.5 bn in December. Notably, Japanese exports fell 5.6% in 2019, or the first decline in three years.



the Dow closes in the red US stock benchmarks traded mostly higher on Wednesday, January 22 amid fading investor worries about the outbreak of the coronavirus in China as Chinese authorities have been doing their utmost to combat the virus.

Macro data were also upbeat, with US existing home sales reaching 5.54 mn in December against a projected increase from 5.35 mn in the previous month to just 5.43 mn.

In addition, patchy quarterly earnings from a number of major corporations were in the spotlight. Major consumer goods company Johnson & Jonson failed to deliver stellar results, so the Dow closed marginally lower. IBM’s robust report and upbeat guidance helped the S&P 500 and the Nasdaq to reach new alltime highs.

Recapping the benchmarks, the blue-chip gauge Dow Jones Industrial Average ticked down 0.03% to 29,186.27, the S&P 500 edged up 0.03% to 3,321.75 and the technology-heavy Nasdaq Composite advanced 0.14% to 9,383.77.

In commodities, March NYMEX WTI dropped USD 1.64 to USD 56.74/bbl. February COMEX gold fell USD 1.20 to USD 1,556.70/oz. The 10-year government bond yield remained unchanged at 1.77%.

In corporate news, the world’s biggest computer services provider International Business Machines (IBM) surged 3.5% after posting better-than-expected financial results for the fourth quarter. Adjusted EPS stood at USD 4.71 per share, while analysts forecast USD 4.69 per share. Meanwhile, fourth-quarter revenue increased to USD 21.78 bn vs. the median forecast of USD 21.64 bn. IBM expects adjusted EPS to total at least USD 13.35 per share in 2020, while analysts on average forecast USD 13.28 per share.

Major US cosmetics manufacturer Johnson & Johnson slipped 1.0% as quarterly revenue missed expectations, while the management guided for lackluster FY revenue. Revenue grew 1.7% y-o-y to USD 20.75 bn, or below the median consensus (USD 20.80 bn). J&J projects net revenue in the range of USD 85.4-86.2 bn in 2020, although analysts expect USD 85.52 bn.

In the blue-chip segment, the number of outperformers and underperformers was almost equal, with the gains, in addition to IBM, led by Intel (+3.6%) and Coca-Cola (+0.8%), while notable decliners included Dow (-3.3%), Caterpillar (-2.2%) and Boeing (-1.4%).

S&P 500

The daily chart shows that the S&P 500 continues to trade near the upper line of Bollinger Bands, while the Slow Stochastic Oscillator and the RSI are in overbought territory. In light of the above, the index could start falling in the short term


markets under pressure from Chinese news Key European stock indices landed in negative territory on Wednesday, January 22, as investors remain concerned about the coronavirus outbreak in China, with the death toll rising to 17 people.

No market-driving macro data came out yesterday, while today traders will be focused on US employment data as well as the ECB policy meeting, at which the regulator is expected to hold interest rates steady.

Moreover, the ongoing World Economic Forum in Davos remains in the spotlight. In recent news, US President Donald Trump and European Commission President Ursula von der Leyen held discussions about broader US-EU cooperation. To remind, Trump said earlier that the US will slap a 25% tariff on European-made cars unless the US and the EU can reach a trade deal.

Recapping the benchmarks, the UK’s FTSE 100 slipped 0.51%, the French CAC 40 eased 0.58%, and the German DAX dropped 0.30%. The regional barometer STXE 600 closed 0.08% lower at 423.04.

German automaker Daimler dipped 2.12% after reporting downbeat pro-forma earnings for full-year 2019. In particular, EBIT fell about 50% to EUR 5.6 bn (USD 6.2 bn).

Semiconductor equipment maker ASML Holding shed 0.4% although the company reported increases in profits and revenue for last quarter, citing strong demand for its products.

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British real estate developer Berkeley Group Holdings surged 4.4% after saying it intends to boost returns to shareholders.

Software developer Sage Group picked up 3.9% after reporting gains in organic revenue for Q1 2020 and reiterating earnings guidance for full-year 2020.

Major European bourses have been in decline during the first half of trading on Thursday, January 23 as risk-off sentiment prevailed on concerns about the outbreak of a new coronavirus in Asia. Moreover, traders await the outcome of the ECB’s policy meeting.

By 09:00 GMT, the UK’s FTSE 100 slipped 0.22%, the German DAX eased 0.42%, and the French CAC 40 ticked down 0.02%. The regional indicator STXE 600 was off 0.19% at 422.22.


On the daily chart, the German DAX is trading within a rising band near its upper line as well as close to the upper line of Bollinger bands, while the Slow Stochastic Oscillator is still hovering in overbought territory. Consequently, the downtrend will likely gain traction in the short term.


virus news keeps benchmarks under pressure Asian stock indices turned in mostly negative performance on Thursday, January 23 as concerns re-ignited that the new coronavirus continues to spread in China ahead of the Lunar New Year holidays.

Key macro data included Japan’s trade deficit that stood at JPY 152.5 bn in December, while analysts, on average, projected JPY 150.0 bn. The country’s imports and exports decreased 4.9% y-o-y and 6.3% y-o-y in December vs. expectations of -3.4% y-o-y and -4.2% y-o-y. Moreover, the November Composite PMI rose 0.9%, beating -0.1% anticipated by a wide margin. Also, data on net foreign investment in local stocks showed the weekly inflow totaling JPY 263.8 bn compared to the JPY 16.4 bn outflow a week earlier.

Australia’s unemployment rate stood at 5.1% in December vs. 5.2% projected. In Singapore, the December CPI came in at 0.8% y-o-y, up from the 0.7% y-o-y consensus forecast.

The Japanese Nikkei 225 retreated 0.98%, the Chinese Shanghai Composite fell 2.75%, Hong Kong’s Hang Seng slid 1.52%, the South Korean KOSPI dipped 0.88%, and the Australian S&P/ASX 200 closed 0.63% lower.

On the S&P/ASX 200, the list of top performers included National Storage REIT and Webjet, which soared 6.31% and 5.04%, respectively. Among the notable decliners, Cimic and Downer EDI tanked 19.68% and 18.05%.

The Nikkei 225 gainers were led by Chiyoda and Advantest, which surged 5.38% and 2.54%, respectively. Among the decliners, Pacific Metals and Yamato Holdings pulled back 4.35% and 3.78%.

In Japan, O&G and metals & mining stocks underperformed the broader market, with Kobe Steel, Mitsui Mining & Smelting and Toho Zinc shedding over 3%.

Technology company Advantest picked up 2.54%, drawing support from US rival Teradyne’s better-thanexpected Q4 financial results.

Hong Kong’s Sunny Optical and AAC Technologies stood out among the decliners, sliding over 3.5%.

In Australia, Downer EDI cratered 18.06% after cutting full-year profit guidance by 18% to AUD 300 mn.

Lenders National Bank of Australia and Westpac ended in the red, while Commonwealth Bank and Australia & New Zealand Banking closed 0.08% and 0.20% higher.

In the O&G sector, Beach Energy pulled back 6.01%, while Woodside Petroleum gave up 1.62%.

Hang Seng

From a technical standpoint, the Hang Seng has broken through the support level at 27,857 and looks set to close a bullish gap near 27,100.

Commodity markets

Oil prices continued to decline on Thursday, with Brent sliding to the lowest level seen in early December 2019. Pressure came from concerns that dissemination of the new coronavirus in Asia could dampen demand in the market that already faces oversupply. According to Chinese authorities, the number of people exposed to the Wuhan virus in China has reached 571, with 17 casualties. Goldman Sachs experts forecast that the virus could curb global oil demand by 260,000 bpd in 2020, with 66% of the decline likely attributable to weaker jet fuel demand. Meanwhile, the adverse impact on oil prices could be USD 2.90 per barrel.

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An additional negative factor for oil prices is signals of another build in US inventories. According to last night’s API report, crude stockpiles showed a 1.6 mn bbl build, while analysts on average forecast a 1.3 mn bbl drawdown. Moreover, gasoline and distillates showed an increase of 4.5 mn bbl and 3.5 mn bbl, respectively. The EIA petroleum status report is due out at 16:00 GMT today.

Non-ferrous metals are in decline on the LME, while gold remains locked within a narrow range of USD 1,550-1,560/oz.

Breaking financial world news from 23 January, 2020.

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