*Maybank IBG eXpresso (3 February, 2022)*
U.S. markets tumbled on tech earnings concerns and hawkish BoE and ECB commentary.
*U.S. Highlights*
Dow 35111.16 -1.45%
S&P 4477.44 -2.44%
Nasdaq 13878.82 -3.74%
VIX 24.41 10.50%
U.S. markets closed sharply lower breaking a four-day win streak as a few high profile earnings misses in the tech space and more hawkish commentary from both the BoE and ECB damaged equity sentiment.
Meta’s stalling user growth, lower 1Q revenue guidance and subsequent 26% drop in its share price weighed heavily on the tech space. Other FAANG stocks were sold in sympathy with AMZN -7.4%, NFLX -5.5%.
All but 1 of the 11 GICS groups closed lower led by Communication Services -6.8% (META!), Consumer Disc. -3.6% an Info Tech -3.1%. Consumer Staples closes just in the green on better HSY +2.7% results.
Small caps fell with the Russell 2,000 down nearly 2% as treasury yields moved higher renewing worries that the Fed may cut off the domestic recovery.
US reportedly has intelligence on Russia detailing plan to fake pretext for invasion on Ukraine; DOD spokesperson: At this time there are no plans for a Biden-Putin meeting.
*European Highlights*
STOXX 600 468.6 -1.76%
DAX 15368.5 -1.57%
FTSE 100 7528.8 -0.71%
CAC 40 7005.6 -1.54%
Europe markets were weaker across the board taking a leg down in the afternoon to close near session lows. Technology -3.5% was the hardest hit group, falling in sympathy to the selloff in their U.S. counterparts after Meta’s(FB US -20.2%) earnings miss.
ECB kept key policy settings unchanged. President Lagarde highlighted upside inflation risk and said it is getting much closer to target; omitted previous comment that hike unlikely in 2022.
BoE delivered in fully priced in rate hike of 25bps to 0.5%; signaled it will begin the balance sheet runoff process by ceasing to reinvest maturing assets.
Major EU PMI Services data was mixed as fresh virus restrictions hit the service sector. The UK beat expectations while misses came from the Euro Zone, Spain, Italy. French and German data was in line with expectations.
*Stock Highlights*
Meta Platforms(FB -26.4%) lost more than a quarter of its market cap following results which showed user growth stalled in 4Q and projected 1Q revenues of $27-$29bn, below the consensus of $30.25bn.
Apple(AAPL -1.5%)/Alphabet(GOOGL -3.2%) Senate Judiciary Committee approves bill that targets Apple's and Google's dominance in App Store services.
Amazon's (AMZN -7.4%) +19% post close after reporting profit that topped expectations, led by its cloud-computing division, calming investor concerns about slowing online sales growth and rising fulfillment costs; to increase Prime membership +17%. Guides Q1 Rev $112-117B, +3-8% y/y v $121Be.
Tesla (TSLA -1.5%) recalls ~817.1K US vehicles due to issue with seat belt chime may not activate when vehicle starts; Said to perform over-the-air software update to address the issue.
*Notable ADR & Asia News*
TSMC(TSM -3.5%) U.S. Commerce Secretary says we are "dangerously dependent" on TSMC supply; must increase production of chips domestically, and have foreign companies open plants in the U.S.
China Unicom(sanctioned) China's Ministry of Industry and Information Technology says the U.S. should withdraw the unfair decision to eject China Unicom and stop politicizing economic issues.
Infosys(INFY -4.3%) the company approved the issue of 2.31 million stock incentive units under its Incentive Compensation Plan and Expanded Stock Ownership Program.
ICICI Bank(IBN -1.9%) makes additional investment in the India International Clearing Corporation, raises its stake in IICC to 9.9% with INR44.3mn investment.
*Forex*
BitCoin 36832.6 -0.28%
DXY 95.41 -0.55%
USDMYR 4.1840 0.04%
EURMYR 4.7215 -0.94%
GBPMYR 5.6733 -0.25%
AUDMYR 2.9773 0.39%
SGDMYR 3.1034 -0.04%
JPYMYR 3.6398 0.48%
SGDUSD 0.7439 -0.22%
USDSGD 1.3443 0.22%
EURSGD 1.5371 -0.92%
GBPSGD 1.8277 0.07%
AUDSGD 0.9590 0.24%
JPYSGD 1.1693 0.67%
The Dollar sold off early with the DXY weakness driven by a sharp rally in the Euro following the ECB update where President Lagarde omitted her previous remarks that an interest rate increase in 2022 is unlikely.
MYR: The Ringgit advances to its highest in three weeks as the nation’s manufacturing PMI signaled a fourth month of expansion. The Malaysian currency did close off intraday highs tempered by the slower rate of growth with January’s Mfg PMI reading at 50.5 versus December’s 52.8.
*Commodities*
CPO 5518 0.09%
Brent 90.99 1.70%
WTI 90.03 2.01%
Oil recovered from early lows to close above $90 for the first time in over seven years. Dollar weakness and U.S. winter storms that could threaten some production underpinned gains.
Palm Oil: continued to ease off all-time highs as soybean oil fell and on concerns its rise cost will put a dent in demand for the tropical oil.
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