NAB Morning Call

Thursday 20th February 2020

The markets have spun around again, with renewed optimism and not much lingering concern from Apple’s revenue warning yesterday. In fact, Apple shares rebounded today. NAB’s David de Garis says the rise is more to do with the continued strength in the US economy, versus the weakness in Europe. Phil Dobbie asks him whether it’s possible to support a simultaneous rise in equities and the US dollar for long? They also discuss today’s employment numbers for Australia and tonight’s Democratic debate from Nevada.

Wednesday 19th February 2020

The markets have returned to adopting a more cautious approach to the impact of COVID-19, after Apple said it didn’t expect to meet its forward guidance. NAB’s Gavin Friend talks about the market impact, which has seen further strength in the US dollar and a fall in global equities. A survey of analysts in the Eurozone showed that hope is diminishing that the slide in the economy is bottoming out, although it might spark finance ministers to move faster on stimulus measures. Locally, the RBA minutes yesterday suggested they are more accommodating to an easing policy than many had expected. Japan’s trade balance numbers today could help determine whether they will be the first major economy this year to hit a recession.

Tuesday 18th February 2020

Nobody was expecting anything other than a bad GDP read from Japan but, as NAB’s Tapas Strickland explains, it was worse than bad. Yet there’s renewed confidence in China, with government stimulus measures helped to boost the CSI300 almost to pre-virus levels. Does that mean the concerns for the Australian economy are lessened? Philip Lowe downplayed the impact a little last week, will the minutes of the last RBA meeting reflect that sentiment, and does that mean a rate cut in the short term is looking less likely? And what about reports that the US will impose further restrictions on supplying semiconductors to Huawei? Plus, the end of the road for Holden. So sad.

Monday 17th February 2020

Markets are cautiously hoping the worst of the Corona Virus is over, with equities creeping up slowly in the US and commodity currencies gaining some ground last week. But, as NAB’s Ray Attrill tells Phil Dobbie, there’s still a lot of ground to recover and the impact on demand from China could be felt for some time. A key factor to influence the Australian economy this week will be whether bans on visitors from China are lifted this week. There’s also discussion on the US retail sales numbers from Friday, Japan's GDP read today, and the White House’s tariff increase on Airbus.

Friday 14th February 2020

The markets slipped momentarily into risk-off as the number of Corona virus infections jumped in volume, but concern slipped back a little as it became clear that the way cases were being measured had changed. Phil Dobbie discusses the shift in mood with NAB’s David de Garis in London. They also talk about the resignation of the UK’s Chancellor, Sajid Javid. The pound has gained somewhat, perhaps on the hope that more control from Boris Johnson will clear the way for some of his high-spending election promises. The Euro fell further, ahead of GDP numbers today and could fall below technical levels in the next 24 hours.

Thursday 13th February 2020

The markets are continuing to discount the impact of the Coronavirus as the infection rate and mortality rate eases in China. Bond prices have fallen, and equities have hit new highs. Phil Dobbie discusses the riser in oil prices with NAB’s Gavin Friend, even as OPEC makes a significant downward revision to its Q1 forecasts. They also discuss the hawkish tone set by the RBNZ yesterday and it’s impact on the NZ dollar, which has held much of its gain in the overnight session. Europe, meanwhile, has little to offer in terms of positive sentiment – even though shares are up there, industrial production numbers showed a significant fall in December and the Euro is paying the price today.

Wednesday 12th February 2020

President Trump tweeted as Jerome Powell launched into his testimony at Capitol Hill, saying that shares were falling the more he spoke. NAB’s Ray Attrill says this indicates where the President’s focus is ahead of this year’s election, so perhaps we can discount him becoming too aggressive against Europe on trade. The European economy continues to look lacklustre, which will be evidenced by industrial production numbers tonight. More government spending was the repeated call from the ECB’s Christine Lagarde today, whilst Boris Johnson is doing just that, committing to continue with the overspent, heavily delayed HS2 rail project, just as UK GDP numbers show a quarter without growth. Meanwhile, remember the Corona Virus. It seems to have been momentarily discounted by the markets, but for how long? The Aussie dollar was boosted by yesterday’s housing numbers and the RBNZ offers its monetary policy statement which, virus aside, could be fairly hawkish – we’ll see, around lunchtime.

Tuesday 11th February 2020

As China’s factories start to reopen, and the PBoC do everything they can to maintain economic stability in the country, there seems to be hope of an early recovery to the impacts of the Coronavirus. Phil Dobbie talks to NAB’s Rodrigo Catril about what that recovery would look like, should it come soon. Meanwhile, Australia faces its own issues – to what extent will trade with China, plus the recent bushfires, impact business sentiment and conditions in the NAB Business Survey today, whilst the UK publishes Q4 GDP numbers today. And it’s a day for central bankers to face parliament – Jerome Powell and Mark Carney are both answering questions from politicians. And, speaking of politics, Angela Merkel’s heir apparent has quit, creating more uncertainty in Europe and hurting the Euro a little today.

Monday 10th February 2020

There were lots of positive take-outs from the US non-farm payrolls on Friday night. In today’s podcast Phil Dobbie suggests to NAB’s Tapas Strickland that ordinarily these numbers would be a cause for optimism in the markets, yet concerns of the impact of the corona virus are having the opposite impact. That saw the Aussie dollar hit s post-GFC low on Friday, So, with little in the way of new data today, could the virus cause more market contagion? There’s also discussion about Philip Lowe’s parliamentary testimony on Friday, and what we can expect from the Fed’s Jerome Powell who faces politicians for two days this week.

Friday 7th February 2020

China will halve the tariffs on a swathe of US imports next week, driving optimism in equities in the US and Asia. NAB’s Tapas Strickland says this, together with earnings and positive economic data is helping to drive equities still further, despite continued concerns over the Coronavirus. The pound, meanwhile, is struggling as the EU pushes hard on the need for regulatory control of the City. Locally, retail sales have been well received, pushing back the expectation for when the RBA will cut rates. Today the RBA publishes its statement on monetary policy, including revised forecasts, just as Philip Lowe appears in front of the parliamentary committee. And tonight, the non-farm payrolls data is expected to show further signs of US strength.