Five Things You Need to Know to Start Your Day
U.S. stocks rallied for a fifth day as comments by Federal Reserve Chairman Jerome Powell reassured investors that the central bank is going to be patient raising interest rates going forward. Here are some of the things people in markets are talking about.
Jerome Powell said the U.S. central bank can be patient before adjusting interest rates again as it waits to see how global risks impact the domestic economy. “We’re in a place where we can be patient and flexible and wait and see what does evolve, and I think for the meantime we’re waiting and watching,” Powell said in a question-and-answer session Thursday at the Economic Club of Washington, D.C. Minutes of the Fed’s December meeting released on Wednesday showed that many officials are taking a cautious approach to further rate increases. Stocks briefly dipped Thursday after the Fed chair discussed returning the balance sheet to a normal level.
Stocks Rally Rolls On
Asian stocks looked set to open mostly higher after U.S. equities pushed gains to a fifth day in a row following the comments by Powell. The S&P 500 Index rallied as gains in utilities, industrials and real estate shares overwhelmed weakness in retailers sparked by concerns about a sales slowdown and fears about the potential consequences of the ongoing partial government shutdown. The yuan extended its advance and Treasury yields climbed with the dollar. “Markets are ultimately waiting to see if Fed’s new rhetoric related to stepping back, does it translate to action, and does the Fed actually pause at some point,” Dan Skelly, head of equity model portfolio solutions at Morgan Stanley, told Bloomberg TV in New York.
Next Flash Crash
If once is an accident and twice a coincidence, traders looking for a third currency flash crash are surely poring over Japan’s holiday calendar by now, bracing for enemy action. Last week’s yen-driven crash that sent the Turkish lira into a tailspin and a sudden plunge in the South African rand in January 2016 had three things in common: they happened in the so-called early Asian witching hour, during an extended Japanese holiday and involved elevated long positions from retail investors in under pressure high-yielding currencies. With nine more extended holidays coming in 2019, taking account of weekends, speculators may be readying for a further attack on Japanese retail positions, should a similar opportunity arise, according to market participants. The next holiday up is Jan. 14.
Abe on Brexit, North Korea
Japan’s Prime Minister Shinzo Abe told Theresa May the whole world wants to avoid a no-deal Brexit even as she faces likely defeat when Parliament votes on her plan next week. Following a day of meetings between the two leaders in London Thursday, Abe publicly backed May’s agreement and offered her his “deepest respect” for the work she has done in securing an agreement with the European Union. During the same press conference, Abe said his government is “using various channels” to communicate with North Korea, including over a potential summit with Kim Jong Un. Asked by a reporter about meeting Kim, Abe said last year’s summit between the North Korean leader and U.S. President Donald Trump meant the “situation has greatly changed” and as both sides work toward further talks, “I think next time around I will also have to face Kim Jong Un.”
Trade wars, China’s slowdown, erratic stock markets: The outlook is getting grimmer for an increasing number of companies across the globe. Just Thursday, more than a half-dozen corporate giants either lowered their profit forecast, announced massive job cuts or pulled plans in the face of market volatility. American Airlines Group Inc., Jaguar Land Rover, Macy’s Inc. and BlackRock Inc. were among the biggest casualties, joining the likes of Apple Inc. and FedEx Corp. that have warned recently that the future isn’t looking as good as it did just a few weeks ago.
What we’ve been reading
This is what caught our eye over the last 24 hours.
- As bullish yuan bets pile up, Jefferies currency head preaches caution.
- Goldman predicts bullion prices to climb to highest since 2013.
- Ghosn’s wife is worried about executive’s detention conditions.
- Cash-strapped Jet Airways said to look again to Tata for rescue.
- Twitter users in China face detention and threats in new Beijing crackdown.
- Trump cancels trip to Davos gathering as shutdown grinds on.
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