Markets rebounded after worries about a six-week delay in U.S. COVID relief. 3M and Johnson & Johnson reported earnings, while the EU faces vaccine supply shortages from AstraZeneca and Pfizer. Italian PM Giuseppe Conte resigned, and Microsoft and AMD report later this week.
Chapters
Okay, very good day to you. It is Tuesday, 26th of January. Just going to give you a really quick update then of what's happened so far this morning and what to expect as we go into the North American session. So starting off with the need-to-know news before we look at the day ahead. First thing, we've had a recovery in equity index futures after the dip that was seen during the Asia-Pacific hours. A lot of that Asian trade came not from a catalyst so much of their domestic situation of that continent, more so a bit of apprehension that was seen in the early part of Wall Street trade yesterday over the delay, potentially up to 6 weeks of enactioning the latest COVID relief plan in the US. I don't think that's particularly new information. I think the market's perhaps got a little bit carried away over the timing and execution of the latest Biden COVID plan. But the reality is, with the trial of the Trump impeachment in the Senate coming up on the 8th of February, this undoubtedly then is going to become a little bit of a distraction. Also, there's certain compromises that no doubt will need to be made and concessions found in order to get this bill over the line. So markets have recovered. There hasn't been a long-lasting reaction effect to that. And if anything, any of that downside has already been taken back in US equities when we're looking at the futures market this morning. The S&P worth keeping an eye on. We're trading back up towards the top end of the range for the week so far. The other thing then is about ongoing EU frustration on the supply of vaccinations. Now, the EU has already been lagging that considerably of the rollout of people being administered their vaccine compared to the UK and the US. France in particular has been particularly slow. And what's happened is the likes of AstraZeneca— we've also had Pfizer and BioNTech going back on the actual numbers, what substantial degrees of over 50% of the amount of vaccinations they can now supply to Europe in the mainland in Q1 of this year. This obviously is critical for the economic situation of that area, given the quickly— more quick the rollout can pick up pace, the quicker then restrictions can start to tail off and economic activity can pick up. So Europe have been particularly frustrated by this. Sky News in the UK reported earlier today that that the EU has threatened to impose strict controls on exporting of coronavirus vaccines, perhaps even to the UK included. This in itself, if it was to manifest into something more meaningful, could be quite problematic. But where the distribution is happening of vaccines in the mainland Europe is in Belgium, which is more Pfizer and BioNTech, whereas the UK strategy is more heavily dependent on the AstraZeneca drug, which they've said should not then, even with supply issues on the Pfizer drug, prevent any issues going forward. So definitely worth keeping an eye on, uh, something that's developing and becoming a bit of a political weapon almost at the moment between, uh, discrepancy of UK and Europe. The other thing is then is the Italian PM Conte has resigned. Um, when I delivered this briefing yesterday, he was kind of to push back from this resignation, but the inevitable I guess has happened. Uh, this now triggers then he will meet with the Italian President Mattarella to try and then be given a new mandate to form a new stronger government. So that's where we're at, at the moment. In terms of the BTP reaction, actually yields have fallen on the back of this because this is very much as expected and is the next logical step. And it was also leaked by the press last night. A couple of pre-market earnings of a larger market cap to be aware of. We've had 3M just hit the tape as well as Johnson Johnson. Both are seen up marginally in pre-market trade. By the numbers, 3M adjusted EPS $2.38 against $2.15. Revenues also beat at $8.58 billion against 3.4. J&J headline 186 against 182, revenues at $21.6 billion, roughly in line with expectations. In terms of the day ahead, economic data-wise, US consumer confidence, API oil inventories are due later today. And then after market, we get the first of the mega-cap kind of tech names to report this week. Very much a large emphasis on those earnings because we've got the likes of Apple, Facebook, likes of Tesla as well reporting tomorrow. But after market today, you've got Microsoft, uh, the EPS expected at $1.64, revenues expected at just over $40 billion for the quarter. A lot of focus, of course, on their intelligent cloud segment, which is the company's Azure public cloud platform. Analysts expect that to bring in around $13.77 billion in revenue, which would be up around approximately 16% from the year ago period. So they'll be after the closing bell alongside the likes of the chipmaker AMD. Then Davos continues. A couple of keynote speakers including the German Chancellor Angela Merkel and French President Emmanuel Macron are speaking later on today at 2 and 3 o'clock London time respectively. Not expecting a great deal here. It's not normally a platform for them to say anything particularly new. However, Macron's under a little bit of pressure at the moment politically and domestically, and interestingly this comes with the next round of elections happening in just over a year's time in France and him coming under considerable pressure about how slow it's been to adopt vaccines and the restrictions and lockdowns and the impacts that's had on the French economy has given some weight in the polls to National Front's Marine Le Pen. So nothing to think about right now, but something which will probably emerge as an ongoing topic because like we've seen, this has caused political disruption in the likes of Italy. Then what's the general theme for the afternoon? Well, those data points I mentioned, I don't think are going to be particularly too noteworthy. I think still markets driven sentiment-wise by largely any movement on the negotiations on the side of US stimulus. However, I don't foresee anything happening specifically today, probably too soon for that. Um, but then anything on COVID and also on the vaccine, just more broadly speaking. Still awaiting the J&J update on that front. And then from a COVID situation, generally the numbers in the US have been okay. They reported a 21% drop in new cases of COVID-19 as of last week. So we are starting to see the pressure on hospitalizations, things like that, starting to decrease in America, but still quite elevated in other countries, whereas the likes of the UK and others, and France specifically. So that's your, your kind of midday wrap, just going into the US session. If you want the full briefing and access to the live stream, check out the Amplify Live link below. Have a good session ahead.
