NAB Morning Call

Thursday 6th February 2020

Markets are on the rise again this morning, based on positive economic data from the US and, to an extent, for Europe, whilst hoping that the Coronavirus won’t deliver any worse news. As Phil Dobbie discusses with NAB’s Gavin Friend, this combination has delivered a further rise in US equities and strengthened the US dollar, with bond yields also rising. The US non-manufacturing ISM read for January was up more than expected, actually at its best level since August. Gavin says there’s optimism from a number of central banks lately, which was reflected in Philip Lowe’s address to the Press Club yesterday. Today, all eyes will be on Australian retail sales numbers.

Wednesday 5th February 2020

On Monday NAB’s Rodrigo Catril said the markets are blowing hot and cold on the Coronavirus – since then the markets have dived, then climbed back again. Today has been largely positive across currencies, equities and commodities, with bond yields also driven up. Phil Dobbie asks how much of this positivity is responsible for the Aussie dollar picking up from a near post-GFC low yesterday, and how much is from the optimistic (perhaps too optimistic) outlook from the RBA? They also discuss NZ employment numbers today and US non-manufacturing ISM numbers out tonight.

Tuesday 4th February 2020

US equities bounced back today – perhaps because there wasn’t a lot of new news on the Coronavirus, but also because US ISM numbers exceeding expectations. As Phil Dobbie discusses with NAB’s David de Garis, perhaps this suggests that, without the virus, the global economy would be returning to a good place. Even revisions to Markit PMIs for Europe provided some room for home. All the more reason, then, for the RBA to sit tight today. The only real volatility today came from the pound, hit surprisingly hard considering we knew there would be some argy-bargy with Barnier.

Monday 3rd February 2020

The Australian dollar – and emerging markets more broadly – were hit by further concerns over the spread of the Coronavirus. Phil Dobbie asks NAB’s Rodrigo Catril whether this is a market overreaction, almost to the point of ignoring key economic data? All eyes will continue to scan headlines for signs that the virus is being contained, or spreading further, and there will be attention on China today where the equity markets reopen after the Lunar New Year holiday. Plus, will the double whammy of the virus and bushfires impact the RBA’s decision tomorrow?

Friday 31st January 2020

The Corona virus continues to cause concerns, hitting all asset classes today, including US and European equities overnight. NAB’s Gavin Friend suggests the news is mixed, with the virus still well contained, but there will be economic fallout in the region and the Aussie dollar is one of the casualties. It was 50:50 as to whether the Bank of England would cut rates or not. In the end, they decided to keep rates on hold, reflecting the optimism shared by other central banks of late. And the US economy continues to grow, but it slowed in 2019 and was a way off the 3 percent target that the White House had promised.

Thursday 30th January 2020

The least surprising news today is the decision by the FOMC to keep rates on hold in the US. As Phil Dobbie discusses with NAB’s Tapas Strickland the Fed has determined that their policy is appropriate for now. Tonight’s GDP numbers from the US will help determine whether they are on the right path. It might be a different story for the Bank of England tonight, and question marks remain over the RBA next week. Will yesterday’s slight pickup in inflation exert any influence? Meanwhile news around the Corona virus continues to darken, raising the question, which asset classes have factored in the damage this worsening crisis could do.

Wednesday 29th January 2020

US stocks have rebounded after a day when they were hit hard over concerns on the spread of the Corona virus. NAB’s Ray Attrill suggests to Phil Dobbie on today’s podcast that it’s the lack of new news that has force the rethink, indicating that further volatility is possible. Meanwhile, we await the latest CPI figures for Australia today. Yesterday’s NAB business Survey highlighted continuing weakness in the economy, so what does that mean for the RBA decision next week. It’s unlikely the FOMC will change rates in the US tomorrow morning, but we’ll be here first thing to cover anything that comes out of the press conference.

Tuesday 28th January 2020

The Australian dollar has fallen more than one percent today as concern continues over the spread of the Corona virus. As Phil Dobbie discusses with NAB’s David de Garis, the Aussie economy will be one casualty if the virus spreads and China’s economic growth is hit hard, just as it was with the SARs outbreak in 2003. They also discuss today’s NAB Business Survey, more evidence of a ‘Boris Bounce’ in the UK and disappointing ne whom sales from the US, and a weaker than anticipated IFO from Germany.

Friday 24th January 2020

Concerns over the spread of the Corona virus have heightened, with two further Chinese cities now in lockdown. NAB’s Gavin Friend talks to Phil Dobbie about the market reaction, with classic risk-off sentiment evident right now. The Aussie dollar has been saved from a bigger fall by the positive jobs numbers yesterday, which will perhaps push back the timing of a rate cut from the RBA. Could it be a similar story in the UK? Expectations of an imminent cut have diminished; will today’s PMIs support the more optimistic view of the UK economy? There are PMIs for Australia and Europe today, so it’s a big day for numbers. Meanwhile the ECB seems to be on a holding pattern, pending their strategic review.

Thursday 23rd January 2020

There continues to be concerns about the spread of the Corona virus. As Phil Dobbie discusses with NAB’s David de Garis, US equity markets have regained composure but will news of a lockdown of the Wuhan district fan further volatility? The UK seems to be enjoying a bounce after the recent election, with positive business sentiment pushing the pound higher, whilst a very dovish statement from the Bank of Canada has sent the Canadian dollar lower. Locally, the focus will be Australian employment numbers today, although the read is likely to be influenced somewhat by the bushfires. And President Trump has indicated a deal with the EU is his next target, by November, threatening auto tariffs if things don’t moved forward satisfactorily.