US stock market, economy and companies update (January 31, 2014)
January 31, 2014, Friday, 17:32 GMT | 12:32 EST | 22:02 IST | 00:32 SGT
- Yesterday's US equity gains vanished in the premarket as weak Eurozone inflation and unemployment reports knocked over equities on the continent. Indices have ramped upwards midway through the US morning but remain pretty deep in the red. The DJIA is down 0.88%, the S&P500 is down 0.49% and the Nasdaq is down 0.60%.
- The Fed's favored measure of inflation inched higher in December data published this morning. The core PCE price index rose 0.1% from a month earlier, bringing the y/y core inflation rate to 1.2% from 1.1%. The core measure remains well short of the Fed's 2.0% inflation target. December personal spending grew by about twice the expected amount, however incomes remained flat. The modestly strong report helped strengthen the greenback and contrasted very sharply with the eurozone's continuing disinflation.
- The very low January Eurozone flash January CPI reading continues to reverberate through markets. Headline inflation was 0.7%, matching the four-year low seen in October. The ECB has vocally dismissed arguments that Europe is facing deflation, however the bank cut rates by 25 bps in the wake of the October CPI data. This morning analysts are gaming another ECB cut with the bank's main refi rate at a mere 0.25%. RBS forecasted another 15 bps cut while Deutsche Bank called for a 5-20 bps cut. After fighting to hold the 1.3550 level through the overnight hours, EUR/USD slipped to 1.3480 as of 10:00ET, its lowest level since last November, before bouncing a bit higher. After the contrasting US and Eurozone inflation reports, the US-German 2-year spread is at six-month highs, at a little more than 26 bps.
- Walmart cut it Q4 and FY14 guidance to "slightly below" the low end of its prior ranges. The firm's outlook for Q4 SSS was bumped lower to slightly negative from flat. The retailer blamed cold, heavy winter storms and a steeper-than-expected impact from the reduction in certain welfare payments (namely SNAP, the government's Supplemental Nutrition Assistance Program). Shares of WMT lost around 2% in the premarket, but have regained some ground in the early going.
- Microsoft is being watched very closely for more news on the CEO succession process. Yesterday morning, tech blogs reported that the search for a new chief could come to an end this week, with VP of Cloud and Enterprise Satya Nadella seen as the most likely candidate. There were also reports that the board may replace Bill Gates as chairman.
- Amazon is giving the market a huge headache this morning. After several quarters of tiny or zero profits, the firm earned $510M in its fourth quarter with decent margins but its headline earnings and revenue missed tough consensus expectations. The high end of Amazon's first quarter guidance range met estimates but the bottom end was well short, although this is the firm's standard practice. Shares of AMZN tanked 10% in post-market trading and have gained slightly to -8.8% in the early going.
- Google is up 3.4% or so in the early going. The firm more or less met revenue expectations in its fourth quarter, on a solid 31% increase in paid clicks, but profits were a bit short. The firm disclosed the flagging revenue performance of its Motorola unit, including y/y revenue declines and continued operating losses.
- Much like Exxon and Conoco yesterday, Chevron's revenue performance in its fourth quarter was disappointing. Production levels, upstream earnings and downstream earnings all declined y/y. Profits fell more than 30% y/y. Even worse, initial FY14 production guidance was a mere 0.5% above FY13 levels. Shares of CVX are down 3.7%.
- 13:00 (CO) Colombia Central Bank Interest Rate Decision: Expected to leave Overnight Lending Rate unchanged at 3.25%
- 14:00 (AR) Argentina Dec Construction Activity M/M: No est v -1.9% prior; Y/Y: No est v 2.9% prior
- 19:00 (KR) South Korea Jan Trade Balance: $1.4Be v $3.7B prior; Exports Y/Y: 1.5%e v 7.1% prior; Imports Y/Y: -2.0%e v +3.0% prior
- 20:00 (CN) Chile Jan Manufacturing PMI: 50.5e v 51.0 prior
- (IN) India Forex Reserves w/e Jan 25th: $292.2 v $292.1B
- (IN) India Q1 GDP Annual Gov't Estimate Y/Y: 4.5% v 6.7% prior
- (ZA) South Africa Dec Trade Balance (ZAR): 2.8B v 3.0Be
- (CL) Chile Dec Unemployment Rate: 5.7% v 5.7%e
- (RU) Russia 2013 Annual GDP Y/Y: 1.3% v 1.5%e
- (BR) Brazil Dec Nominal Budget Balance (BRL): -13.6B v -14.0Be; Primary Budget Balance: 10.4B v 11.; Net Debt to GDP Ratio: % v 34.0%e
- (PL) Poland Central Bank (NBP) Jan Inflation Expectations Survey: 0.5% v 0.8%e
- (US) Dec Personal Income: 0.0% v 0.2%e; Personal Spending: 0.4% v 0.2%e
- (US) Dec PCE Deflator M/M: 0.2% v 0.2%e; Y/Y: 1.1% v 1.1%e
- (US) Dec PCE Core M/M: 0.1% v 0.1%e; Y/Y: 1.2% v 1.2%e
- (US) Q4 Employment Cost Index: 0.5% v 0.4%e
- (CA) Canada Nov GDP M/M: 02% v 0.2%e; Y/Y: 2.6% v 2.6%e
- (US) Jan Chicago Purchasing Manager: 59.6 v 59.0e
- (US) Jan Final University of Michigan Confidence: 81.2 v 81.0e
- (MX) Mexico Central Bank (Banxico) leaves Overnight Rate unchanged at 3.50%, as expected