US stock market, economy and companies update (January 30, 2014)
January 30, 2014, Thursday, 17:21 GMT | 12:21 EST | 21:51 IST | 00:21 SGT
- Germany reported a strong employment report, while inflation readings came in negative m/m
- Emerging market currencies remain wobbly
- Continuing emerging market stress and the second installment of the Fed taper kept Asian and European equity markets pretty subdued in overnight trading. The decent Q4 US GDP data has provided limited relief for some asset classes and helped US indices make up yesterday's dreadful losses. As of writing the DJIA is up 0.61%, the S&P500 is up 0.73% and the Nasdaq is up 1.63%, with big assist from Facebook.
- The first reading of fourth quarter GDP met expectations, and while the personal consumption expenditures component missed the consensus view the rate of growth was still the highest since 2010. Business fixed investment was held back by a decline in investment following two quarters of strong gains, while equipment investment saw solid growth. Business inventories added four-tenths to headline growth. Residential investment declined 9.8%, reflecting in part the lagged impact of weaker housing starts in past quarters. Net exports were also a strong positive contributor, adding 1.3 percentage points to growth. Federal spending fell 12.6%, pushing total govt spending down 4.9%. It was estimated that the government shutdown subtracted 0.3% from headline GDP growth; imagine no Federal austerity - GDP would have been above 4%.
- US homes fell sharply in December to a more than two-year low due in part to unusually cold weather across the country, pointing to signs of a slowdown in the housing market. There has been little reaction to the data.
- Poor final China HSBC/Markit January PMI numbers, continuing emerging market turmoil and the solid US GDP data have strengthened the greenback and dropped EUR/USD firmly back to 1.3550. USD/JPY has been more subdued, rising to 102.8 from 102.2 yesterday.
- Facebook had a very good fourth quarter, with both earnings and revenues topping expectations on very good y/y growth. Advertising revenue grew a whopping 76% y/y to $2.34B, while mobile users increased nearly 40% y/y, accomplishing the key goals laid out by both management and the analyst community. The CFO said that ad prices increased by 92% in 2013. Shares have been upgraded by a crowd of analysts and shares of FB are up more than 15%. Shares of Twitter are up nearly 8% this morning in sympathy.
- Revenue and production declines at oil majors Exxon and ConocoPhillips are keeping the firms from joining the rally this morning. Exxon's fourth quarter revenue fell 3% y/y while Conoco's declined 15% y/y. EPS figures met or beat expectations, however COP's earnings were bolstered by asset sales - ex the divestitures and other items, profits fell slightly y/y. Conoco's production slid 5.9% y/y, thanks in part to disruptions in Libya and weather-related downtime. Exxon's production fell 1.8%.
- Google has thrown in the towel and agreed to sell Motorola Mobility to Lenovo for $2.6B in cash and Lenovo stock. Lenovo gets the Motorola brand, its portfolio of devices (Moto X and Moto G) and more than 2,000 patent assets. Google will hold on most of the patents it has extracted from the company. In 2012, Google completed its acquisition of Motorola Mobility for $12.5 billion. Shares of GOOG are up nearly 3%.
- Shares of biotech Alexion are up 20% after beating EPS and revenue targets and offering very strong initial FY14 guidance. Revenue grew nearly 40% y/y, although on an operational basis the company still lost money in the quarter. The company specializes in producing Soliris, a treatment for rare blood disorders.
- 13:00 (US) Treasury to sell $29B in 7-YearNotes
- 16:45 (NZ) New Zealand Dec Trade Balance: -383Me v -248M prior; Exports: 4.6Be v 4.5B prior; Imports: 4.0Be v 4.3B prior
- 18:00 (NZ) New Zealand Central Bank (RBNZ) Gov Wheeler
- 18:30 (JP) Japan Dec Jobless Rate: 3.9%e v 4.0% prior
- 18:30 (JP) Japan Dec National CPI Y/Y: 1.5%e v 1.5% prior; CPI Ex Fresh Food Y/Y: 1.2%e v 1.2% prior; CPI Ex Food, Energy Y/Y: 0.7%e v 0.6% prior
- 18:50 (JP) Japan Dec Preliminary Industrial Production M/M: +1.3%e v -0.1% prior; Y/Y: 7.3%e v 4.8% prior
- 19:05 (UK) Jan GfK Consumer Confidence: -12e v -13 prior