Morning Report – Wednesday 3 February

Jon Robson, Head of Trading

“The dollar is fluctuating amid the emerging contrast between the U.S. and European growth dynamics. The U.S. currency is unusually trading inversely to its normal direction against equities whilst speculators increase short positions on the euro.”

Main Headlines

Amazon chief executive Jeff Bezos will depart as CEO in the third quarter, making way for Andy Jassy, who currently heads up its cloud computing division. Bezos will transition to the role of executive chair. The announcement comes as the company posted record quarterly revenues of $125.6bn, up more than 40 per cent in the same period in the previous year, and comfortably beating Wall Street’s expectations.

The U.K. is launching a consultation on its post-Brexit subsidies system, which the government has hailed as a “significant milestone” in the country’s future outside the European Union. The new U.K.-wide “subsidy control system” will replace the E.U.’s state aid regime, which was a major stumbling block in Brexit talks last year.

GBP

Sterling is lower against most majors overnight. Exchanges and traders in London are gearing up for the return of trading in shares in Swiss companies as the UK begins charting a post-Brexit future for its sprawling financial services industry. The U.K.’s controversial decision to adopt an extended dosing interval for AstraZeneca’s vaccine was given a boost by trial data from the University of Oxford, which showed 82% effectiveness with a three-month gap between the two shots.

EUR

The euro is mostly unchanged against other majors in the early morning trade. Mario Draghi, the former president of the European Central Bank, has been tapped to become Italy’s next prime minister. The EU will likely pay a price for its slow and chaotic vaccine rollout compared with the U.K. and U.S. Lockdowns mean the bloc’s economy is losing about 12 billion euros of output a week. A delay in reopening of 1-2 months would generate a blow worth as much as 100 billion euros.

USD

The dollar is higher against most majors this morning. Treasury Secretary Janet Yellen has summoned U.S. financial regulators to discuss recent volatility in financial markets. Yellen called a meeting with the Securities and Exchange Commission, the Federal Reserve Board, the Federal Reserve Bank of New York and the Commodity Futures Trading Commission, the Treasury said in a statement late Tuesday.

Markets

Shares outperformed in South Korea and Japan. S&P 500 and Nasdaq 100 futures climbed after Alphabet Inc. and Amazon.com Inc. reported better-than-estimated revenue. U.S. stocks earlier closed higher for a second session. Treasury yields edged up amid a move to fast track a U.S. stimulus plan. Elsewhere, oil traded at its highest in over a year on tightening global supplies. Gold was flat. Chinese equities slipped after the People’s Bank of China drained some funds from the financial system.

Main Economic Data/Central Banks/Government (All times CET)

8:00 a.m.: Turkey Jan. CPI

9:15 a.m.: Spain Jan. Services, Composite PMI

9:30 a.m.: Iceland Rate Decision

9:45 a.m.: Italy Jan. Services, Composite PMI

9:50 a.m.: France Jan. Services, Composite PMI

9:55 a.m.: Germany Jan. Services, Composite PMI

10:00 a.m.: Euro-Area Jan. Services, Composite PMI

10:30 a.m.: U.K. Jan. Services, Composite PMI

11:00 a.m.: Euro-Area, Italy Jan. CPI

11:00 a.m.: U.K. sells bonds

12:00 p.m.: Turkey sells bonds

1:00 p.m.: Russia sells bonds

4:30 p.m.: EIA Crude Oil Inventory Report

EIA 2021 Annual Energy Outlook

Poland Rate Decision

OPEC+ Joint Ministerial Monitoring Committee meets

Corporate Events

Earnings include GlaxoSmithKline, Orsted, PayPal, Spotify, Qualcomm

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