Easy buyers
There’s a sense that risk assets are turning the page very quickly on the Coronavirus narrative, as new novel cases per day slow to under 20% and the recoveries/death ratio rises to 2-for-1 just about. Major equity benchmarks have raced higher overnight, recapturing all-time highs made in late Jan. before nCoV fears intensified. Though, performance has been selective with Nasdaq (+2.6%) outperforming ASX (+0.76%) and Asia equities, and poster child Tesla (+14%) tipping the scales once again at time of writing.
Tesla
From the sidelines, it’s been nothing short of an impressive bout of price action for the incumbent electric car-maker, whose market-cap currently sits at an incredulous $170bn. For reference, Tesla (TSLA) has well and truly doubled what it was trading at on Dec. 31, a meagre $432 compared to its current $870 (traded into $960 during extended hours).
The stock has taken all but a mere 8 weeks to triple its market cap; surpassing that of Mcdonald’s, dwarfing Ford’s and edging closer to Toyota’s mantle. While Short sellers have clearly been decimated since the release of 4Q results, how long Tesla’s victory lap lasts for is anyone’s best guess. One thing for sure – volatility in the stock has had a rude awakening, and those with short-term skin in the game will need thicker skin.
Decent block sold just before the close (7.50am-7.55am).
Classic FX risk-on
In FX space, the broader risk-on move has seen volatility receive a nice facelift as USD weakened considerably against G10 and emerging markets right across the board. AUDUSD faded some of yesterday’s strength after an expected RBA hold, but has since climbed 0.70% in LD/NY. NZDUSD follows closely behind.
Despite Brent Crude’s fall to US$54 lows, generally oil-sensitive currencies in USDRUB (-0.97%) and USDNOK (-0.71%) still found themselves caught up in the risk-on move. USDCNH consolidated below 7 handle. TWD, PHP, THB, MYR and IDR strengthened, though, lacked the same conviction.
With risk appetite higher, naturally one sees USDJPY higher and that’s exactly how that played out. The anti-risk proxy climbed to 109.5 levels as the investor community strengthened carry trades into US equities.
Up ahead
A few risks to monitor in the calendar ahead manifest in New Zealand employment (8.45am AEDT) and RBA Gov. Lowe’s speech (12.30pm AEDT) titled ”the year ahead”. The reveal of Iowa Caucus results after yesterday’s kerfuffle should also get some interest.
