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Market movers today

This week we have a number of important events ahead of us. In the US-China trade talks, US representatives Mnuchin and Lighthizer arrived in Beijing today for negotiations. Lower level talks will take place at the beginning of the week to prepare for high level talks on Thursday and Friday. A lot of work needs to be done before a deal is on paper and we could very well be into Q2 before a deal is signed at a meeting between US President Donald Trump and Chinese President Xi Jinping, see more here .

At the same time, the US government shutdown is looming on Friday after reports this weekend saying there is no progress on wall discussions, reducing the probability of a passed budget. In the UK, MPs will have an indicative vote on how to proceed with Brexit on Thursday. Also, the Riksbank is due to meet on Wednesday.

Today, the UK preliminary Q4 GDP growth print is being released, which we estimate at +0.3% q/q (+0.1% m/m in December). The growth picture has become weaker, as Brexit uncertainties are weighing on investments and global growth has slowed.

Also today, Norwegian and Danish inflation data is due out. In Denmark, we expect 0.9% (more on page 2).

Selected market news

Stock markets continue to tread water as anxiety over US-China trade talks turned up a notch last week on the news that Trump changed his mind on meeting Xi this month. Markets are mixed in Asia with only the Chinese onshore indices higher as they play catch-up after being closed during the Chinese New Year holiday last week.

In the Brexit saga, the next thing to watch is a vote on Thursday in the British Parliament. The Strait Times have details on the vote here . In a letter to Labour Leader, Jeremy Corbyn, Prime Minister Theresa May has offered fresh concessions on workers' rights and called for cross-party talks. An academic report published on Monday showed that British companies have invested more in the EU following the Brexit vote and that a big drop in EU investments into the UK has taken place since the referendum.

US destroyers sailed near Islands in the disputed South China Sea waters, a move that is likely to anger Beijing. However, it is unlikely to affect the trade talks, which both sides seem to agree on is a separate track from other areas of tension.

The IMF backs the Fed pausing its interest rate hiking cycle . The new Chief Economist Gita Gopinath said it would have a positive impact on the US and that the IMF endorses the Fed's data-driven approach.

General Trend:

• IT and Telecom shares outperform in Shanghai ahead of China/US trade talks
• Declines in oil prices weigh on energy shares in Asia
• Financials weigh on the Australian market, Bendigo drops after earnings
• Several miners in Australia warn operations and financial outlooks will be impacted after severe weather damages/closes down operations
• Iron ore and materials firms rise in China and Australia; Dalian Iron Ore prices trade limit up
• New Zealand Dollar (NZD) rises on the session, Wednesday’s RBNZ policy meeting in focus
• Thai Baht (THB) rises against the US dollar, Thailand Royal Princess Ubolratana Mahidol withdrew her candidacy from the elections
• Swiss Franc (CHF) sees volatility amid Japanese holiday
• China PBoC may release Jan foreign exchange reserves data later today, reserves expected to have risen for 3rd straight month to ~$3.085T v $3.073T prior (US financial press)
• US trade delegation to travel to Beijing for talks on Feb 14-15th
• There is press speculation that Trump and Xi could hold phone conversation before March 1 tariff deadline (US press)

Headlines/Economic Data

Japan

• Nikkei 225 closed
• 6502.JP Expected to cut FY18/19 Op forecast to ¥20-30B, notes costs related to energy business (guided ¥60B currently) - Japanese Press

Korea

• Kospi opens +0.2%
• (KR) South Korea signs new $924M defense cost sharing deal with US, +8.2% from prior and below $1.0B as they were hoping -Korean Press
• (KR) US Commerce Department has preliminarily found that weighted average dumping margins for South Korean steelmakers NEXTEEL Co. is 59.09% and SeAH Steel Corp is 26.47% - Yonhap
• (KR) Inventory of South Korean manufacturers has increased to its highest point in 10 years - Yonhap

China/Hong Kong

• Hang Seng opens -0.1% and Shanghai Composite opens -0.2%
• (CN) China travel over Lunar New Year saw 415M travelers, +7.6% y/y – Xinhua
• (CN) China PBoC may release Jan foreign exchange reserves data later today, reserves expected to have risen for 3rd straight month to ~$3.085T v $3.073T prior – US financial press
• (CN) China 2019 GDP expected to slow to 6.3% in 2019 v 6.6% in 2018 - China Daily
• (CN) Trump's advisers said to have informally discussed holding a summit in March with China President Xi to try to end the trade war; Trump said to plan phone conversation with Xi before March 1 tariff deadline – Axios
• (CN) Talks to resume between China and US on trade, expected to focus on intellectual property; China Vice premier Liu He to join talks - press
• (CN) According to China Commerce Ministry, Lunar New Year retail, food and drink sales totaled CNY1.005T, -1.7% y/y (lowest growth on record since 2005 tracking started) – press
• JD Reports China New year sales from Feb 3-8th +42.7% y/y - Xinhua
• (CN) China PBoC Open Market Operation (OMO): Skips reverse repo operations v CNY80B injected in 14-day reverse repos prior: Net: CNY20B drain v CNY80B injected prior
• (CN) China PBoC sets Yuan Reference Rate: 6.7495 v 6.7081 prior (weakest setting since July 2018)
• (CN) China will see more than CNY1.0T PBoC lending operations expire this week - CSJ
• (CN) Hebei province in China to offer financial incentives for companies seeking to raise equity capital; Province to spend up to CNY100M to encourage local companies to conduct IPOs - financial press
• (CN) US officials do not expect a quick resolution to trade agreement, but some talk that the March 1st deadline could be extended while talks continue - press

Australia/New Zealand

• ASX 200 opened +0.1%
• (FR) Australia signs A$50B contract for submarines with Naval Group for 12 new submarines - press
• JBH.AU Reports H1 (A$) Net 160.1M v 151.7M y/y; EBITDA 264.3M v 256.3M y/y; Rev 3.84B v 3.69B y/y
• FMS.AU Takeovers panel declare unacceptable circumstances in Flinders Mines delisting
• SIG.AU Affirms FY19 underlying EBITDA ~A$75M; Guides FY20 underlying EBITDA A$55-60M, business review identifies >A$100M/yr in cost savings
• (AU) Australian Securities Investments Commission (ASIC) may request Australia Govt may changes to mortgage rules to make it harder for borrowers to obtain a new home loan

Other

• (US) IMF MD Lagarde: Sees possible "economic storm" caused by: trade and tariff escalations, financial tightening, Brexit uncertainty, and Chinese slowdown
• 2330.TW Reportedly to remain exclusive supplier of chips for 2019 series of iPhones - press

North America

• (US) Talks on funding border wall between Republicans and Democrats have again come to a stalemate, with next govt shutdown looming - US press

Europe

• (UK) PM May has agreed to talks with Corbyn on soft Brexit – Telegraph
• (ES) Protesters in Madrid oppose any concessions by the govt to Catalan pro-independence parties; call for early elections – press
• (UK) PM May has rejected targeting a customs union with EU (which would appease Labour Party) - press
• (CH) Switzerland and the UK are expected to sign a trade related agreement on Monday (Feb 11th) - financial press

Levels as of 12:50ET

• Hang Seng +0.2%; Shanghai Composite +0.9%; Kospi 0.0%; Nikkei225 closed; ASX 200 -0.2%
• Equity Futures: S&P500 -0.1%; Nasdaq100 -0.2%, Dax -0.1%; FTSE100 -0.1%
• EUR 1.1312-1.1329; JPY 109.78-110.02; AUD 0.7083-0.7108; NZD 0.6742-0.6774
• Commodity Futures: Gold -0.3% at $1,315/oz; Crude Oil -1.4% at $52.02/brl; Copper -1.0% at $2.78/lb

UK data and Brexit eyed, while US team heads to Beijing for more talks

It promises to be another very interesting week for investors, with the US, China and UK very much at the centre of most of the headlines sending ripples through the markets.

In the UK, we’ll be bouncing back and forth between Brexit and the economy, as we get an almost daily update on the economy. That starts with GDP data this morning, which is expected to show the economy flatlined in December but grew slightly across the whole quarter. In a week in which Germany could follow Italy into technical recession, this suddenly doesn’t seem quite so bad.

Trade talks between the two largest economies continue to be the primary focus for investors, with the narrative around the success of them appearing to change week by week. The prospects for a deal now look very slim, with the best case scenario now looking like an extension of the deadline and a commitment to no more tariffs during that period. Of course, assuming anything when Trump is involved isn’t wise and, well you know the rest.

Robert Lighthizer and Steve Mnuchin have been tasked with heading to Beijing this week to work on the differences and try and rescue a deal, with the 90 day deadline fast approaching. Traders will continue to closely monitor the progress with the dollar being well backed as talks appear to falter, much in the same way that it did during the initial escalation phase.

Gold remains above $1,300 after first test of key support

The rebound in the dollar, following a period of weakness since mid-December, has taken some of the shine off gold. Not much has changed in terms of the key levels here. We continue to see it flirting with $1,300 from above and came within a whisker of testing it last week. As long as this holds, it continues to look bullish, even if the dollar remains a major headwind.

OPEC monthly report eyed as prices remain pressured

Oil is also feeling the weight of a stronger dollar dragging on price, with both WTI and Brent coming off their highs and further delaying a very bullish technical break to the upside. Of course, there are other factors contributing to the declines we’ve seen including record US output and questions over Russia’s compliance with the deal but together all of these are weighing.

The OPEC monthly report will be one to look out for on Tuesday and should give us much better insight into how the group and its allies are complying with the output agreement. With there being so many doubts over global growth this year, it will also be interesting to see what impact this has on the cartel’s assessment of demand growth and whether that will exacerbate the oversupply issue.

For the 24 hours to 23:00 GMT, the EUR declined 0.15% against the USD and closed at 1.1324 on Friday.

On the data front, Germany's seasonally adjusted trade surplus unexpectedly widened to €19.4 billion in December, compared to a revised surplus of €18.9 billion in the previous month. Market participants had anticipated the nation to record a surplus of €18.4 billion.

In the Asian session, at GMT0400, the pair is trading at 1.1320, with the EUR trading a tad lower against the USD from Friday's close.

The pair is expected to find support at 1.1306, and a fall through could take it to the next support level of 1.1293. The pair is expected to find its first resistance at 1.1342, and a rise through could take it to the next resistance level of 1.1365.

Amid no major economic releases in the Euro-zone and the US today, investors would keep an eye on global macroeconomic events for further directions.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the GBP declined 0.12% against the USD and closed at 1.2935 on Friday.

In the Asian session, at GMT0400, the pair is trading at 1.2929, with the GBP trading 0.05% lower against the USD from Friday’s close.

The pair is expected to find support at 1.2908, and a fall through could take it to the next support level of 1.2887. The pair is expected to find its first resistance at 1.2963, and a rise through could take it to the next resistance level of 1.2997.

Looking ahead, traders would keep an eye on Britain’s 4Q gross domestic product along with trade balance, industrial production, manufacturing production and construction output, all for December, slated to release in a few hours.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD slightly declined against the JPY and closed at 109.77 on Friday.

In the Asian session, at GMT0400, the pair is trading at 109.95, with the USD trading 0.16% higher against the JPY from Friday’s close.

The pair is expected to find support at 109.75, and a fall through could take it to the next support level of 109.55. The pair is expected to find its first resistance at 110.07, and a rise through could take it to the next resistance level of 110.19.

In absence of key economic releases in Japan today, investor sentiment would be determined by global macroeconomic events.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD declined 0.25% against the CHF and closed at 1.0000 on Friday.

On the data front, Switzerland's unemployment rate unexpectedly climbed to 2.8% in January, compared to a rate of 2.4% in the previous month.

In the Asian session, at GMT0400, the pair is trading at 1.0002, with the USD trading marginally higher against the CHF from Friday's close.

The pair is expected to find support at 0.9962, and a fall through could take it to the next support level of 0.9922. The pair is expected to find its first resistance at 1.0069, and a rise through could take it to the next resistance level of 1.0136.

Trading trend in the Swiss Franc today is expected to be determined by Switzerland's consumer price index for January, slated to release in a while.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD declined 0.32% against the CAD and closed at 1.3271 on Friday.

In economic news, Canada's unemployment rate advanced to 5.8% in January, compared to a rate of 5.6% in the previous month. Markets had envisaged was for the unemployment rate to rise to 5.7%. Moreover, the nation's seasonally adjusted housing starts declined to a level of 208.0K in January, compared to a revised reading of 213.6K in the prior month. Market participants expected housing starts to fall to a level of 205.0K.

In the Asian session, at GMT0400, the pair is trading at 1.3287, with the USD trading 0.12% higher against the CAD from Friday's close.

The pair is expected to find support at 1.3238, and a fall through could take it to the next support level of 1.3188. The pair is expected to find its first resistance at 1.3332, and a rise through could take it to the next resistance level of 1.3376.

The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the AUD declined 0.10% against the USD and closed at 0.7088 on Friday.

LME Copper prices declined 0.3% or $20.0/MT to $6207.0/MT. Aluminium prices rose 0.1% or $2.5/MT to $1865.0/MT.

In the Asian session, at GMT0400, the pair is trading at 0.7095, with the AUD trading 0.10% higher against the USD from Friday’s close.

The pair is expected to find support at 0.7075, and a fall through could take it to the next support level of 0.7054. The pair is expected to find its first resistance at 0.7112, and a rise through could take it to the next resistance level of 0.7128.

Going ahead, traders wold closely monitor Australia’s NAB business conditions and business confidence, both for January, scheduled to release overnight.

The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, Gold rose 0.29% against the USD and closed at USD1318.00 per ounce on Friday, amid weakness in global equities.

In the Asian session, at GMT0400, the pair is trading at 1315.40, with gold trading 0.20% lower against the USD from Friday’s close.

The pair is expected to find support at 1311.43, and a fall through could take it to the next support level of 1307.47. The pair is expected to find its first resistance at 1319.43, and a rise through could take it to the next resistance level of 1323.47.

The yellow metal is trading in between its 20 Hr and 50 Hr moving averages.