Macro Roundup (Jan 29)

SHANGHAI, Jan 29 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The safe-haven U.S. dollar fell on Thursday in choppy trading and riskier currencies including the Australian dollar reversed earlier losses as stocks rebounded, and as investors repositioned portfolios for month-end.

The dollar was boosted by safety buying earlier this week on concerns that U.S. fiscal stimulus will not be as large as originally hoped, and due to the continuing spread of COVID-19 as countries struggle to roll out vaccines.

But it gave up earlier gains on Thursday as stocks rose, boosted by a reversal of declines in mega-cap technology stocks.

That came even after data on Thursday showed that the U.S. economy contracted at its sharpest pace since World War Two in 2020 as COVID-19 ravaged services businesses like restaurants and airlines, throwing millions of Americans out of work and into poverty.

On Wall Street, the Dow Jones Industrial Average rose 300 points, thanks to gains in Disney, Intel and American Express. The S&P 500 climbed nearly 1%. Thursday’s rally follows the worst sell-off in the Dow and S&P in three months on Wednesday. The Nasdaq Composite closed up 0.50% on Thursday.

Thursday’s rally was a reversal from recent weakness in equities fueled by market volatility spurred by speculative trading from retail investors. Several e-brokers took steps to curb the deliberate buying of heavily shorted names, giving investors a breather from the remarkable, albeit seemingly synthetic, moves in names like GameStop.

Oil slid on Thursday as the impact of a weaker dollar and big U.S. crude inventory couldn’t offset concerns that delays to vaccine rollouts and fresh travel curbs to prevent new coronavirus outbreaks could depress demand.

Brent futures for March delivery fell 27 cents, or 0.48%, to $55.54 per barrel. U.S. West Texas Intermediate (WTI) crude settled 51 cents, or 0.96%, lower at $52.34 per barrel.

Oil prices were supported earlier by Wednesday’s data that showed a huge 10 million-barrel drawdown in U.S. crude inventories last week, which analysts said was because of a pickup in U.S. crude exports and a drop in imports.

Gold eased on Thursday after the U.S. Federal Reserve expressed worries over the slow pace of economic recovery.

Spot gold fell 0.19% to $1841.40 an ounce. Prices had fallen to their lowest since Jan. 18 at $1,830.80 on Wednesday. U.S. gold futures shed 0.2% to $1,840.4.

The Fed said the pace of the recovery in U.S. economic activity and employment had moderated in recent months, but kept its key interest rates and monthly bond purchases unchanged.

The number of people who applied for US jobless benefits in late January fell to the lowest level in three weeks, but layoffs were still high early in the new year as the economy wrestled with a winter surge in the coronavirus pandemic.

Initial jobless claims filed traditionally through the states fell by 67,000 to a seasonally adjusted 847,000 in the seven days ended Jan. 23, the government said on Thursday. 

On the coronavirus front, biotech firm Novavax said that its vaccine was more than 89% effective in protecting against Covid-19. A study found that the vaccine appeared to be 85.6% effective against the U.K. variant. A separate phase two study in South Africa, however, showed the vaccine isn’t nearly as effective against a new strain ravaging that country.

Globally, the coronavirus has infected more than 101.25 million people while at least 2.18 million lives have been taken, according to data compiled by Johns Hopkins University.

Key economic data slated for release today include US personal expenditure and pending home sales for December and University of Michigan's consumer sentiment index for January.