By Geoffrey Smith
Investing.com -- The dollar marches higher as China cuts interest rates and Asia's currencies weaken further amid fears for the regional economic outlook. Elizabeth Warren takes a bite out of Mike Bloomberg in the Democratic debate, but that leaves Bernie Sanders still out in front. Stocks are set to open lower after the Fed's latest minutes and speeches damped rate cut hopes. The oil market finally notices that it's been missing a million barrels a day of oil from Libya for the last couple of weeks and UBS Group is poaching ING's chief executive. Here's what you need to know in financial markets on Thursday, February 20th.
1. Dollar hits three-year high on signs of extended Fed pause, China loosening
The dollar hit its highest level against developed-market peers in nearly three years, thanks to gains against both the Japanese yen and the British pound.
The dollar index, which measures the greenback against a basket of six other currencies rose 0.2% to 99.767 by 6:40 AM ET (1140 GMT), on the back of reports confirming another death from the coronavirus in Japan. Reports of spreading infection in Korea sent it 1% higher against the Korean won and pushed it to a nine-month high against the Thai bhat, another reflection of fears for the broader Asian economy.
The dollar was also stronger against other emerging currencies, rising 0.4% against the Chinese yuan to 7.02 after the People’s Bank of China cut its one- and five-year prime rates by 10 and 5 basis points respectively.
2. Stocks set to open lower; ViacomCBS's earnings in focus
U.S. stocks are set to open mostly lower, still subdued by the minutes of the Federal Reserve’s last policy meeting which underlined how far the Fed is from cutting interest rates.
Minnesota Fed President Neal Kashkari, widely seen as one of the most dovish members of the Federal Open Markets Committee, said in a speech late on Wednesday that he expected the fed funds rate to stay unchanged for six months or even longer.
By 6:40 AM ET (1140 GMT), the Dow 30 futures contract was down 37 points, or 0.1%, while the S&P 500 futures contract was down in parallel and the Nasdaq 100 contract was down 0.2%.
The day’s light earnings roster is headed by gold mining giant Newmont Goldcorp (NYSE:NEM) and ViacomCBS (NASDAQ:VIAC).
3. Sanders profits as Warren takes a bite out of Bloomberg
Democratic candidates rounded on ex-Bloomberg Mayor Michael Bloomberg in his debut TV appearance with his rivals.
Massachusetts Sen. Elizabeth Warren appeared to strike the most telling blows, as Bloomberg struggled to defend a past in which multiple women working for his media company were bound by non-disclosure agreements after alleging sexual harassment or discrimination.
The New York Times, which said Bloomberg looked like an “out-of-practice politician”, credited Warren with a performance that may have helped revive her campaign, without significantly reeling in Vermont Sen. Bernie Sanders.
4. Musical chairs at Europe's banks
It’s time for musical chairs at Europe’s biggest banks. UBS, the world’s largest wealth manager, tapped ING Group’s Ralph Hamers to succeed Sergio Ermotti as chief executive later in the year, ending long-running speculation.
The appointment of an outsider to run Switzerland’s largest bank may raise eyebrows, given the recent experience of rival Credit Suisse (SIX:CSGN) with Tidjane Thiam, who fell foul of the country’s conservative financial establishment.
Hamers is renowned as a digital banking specialist, an area where UBS has struggled to make headway in recent years. However, his star has been waning in the last year, as the group’s stellar growth in Germany has plateaued, and as Hamers’ team has struggled to put behind them the taint of a record money-laundering fine in 2018.
UBS (NYSE:UBS) stock and ING stock both rose on the news.
5. Oil hits three-week high on China stimulus, Libyan outages
Oil prices rose to their highest in three weeks, as a market that was heavily shorted in the early weeks of the Covid-19 outbreak returns to a measure of balance in response to China's latest economic stimulus measures. Market participants are also starting to notice the effects of the sustained drop in Libyan production.
By 6:40 AM ET, U.S. crude futures were at $53.64 a barrel, down from an intraday high of $54.09, helped by predictions of a rapid rebound in Chinese factory activity from April by the CEO of shipping giant AP Moeller-Maersk.
The rebound has continued despite reports of another weekly build in crude stocks above expectations from the American Petroleum Institute. The U.S. government’s data on crude oil inventories are due at 10:30 AM ET, and analysts expect a build of just under 2.5 million barrels.
The rebound also shrugged off fresh comments from Russian oil minister Alexander Novak rejecting calls for an early meeting to discuss further output cuts with OPEC.