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Top 5 Things to Know in the Market on Tuesday, 4th February

By Geoffrey Smith

Investing.com -- Stocks and commodities are bouncing after China's central bank pumped more money into local markets, Alphabet (NASDAQ:GOOGL) stock is on the slide after disappointing earnings - even if it was more transparent than ever about how it makes the money. Walt Disney (NYSE:DIS) and Ford Motor (NYSE:F) lead a cast of hundreds reporting earnings in the course of the day. Officials from OPEC and its allies are meeting in Vienna to discuss further cuts in supplies to a cratering oil market - and the Democratic presidential campaign gets off to a shambolic start. Here's what you need to know in financial markets on Tuesday, 4th February.

1. China's markets stabilize as PBoC opens the taps again

China’s stock markets stabilized after the central bank said it would inject another 500 billion yuan in one- and two-week repos to “ensure adequate liquidity” as fears around the economic impact of the novel coronavirus continued to swirl. Governor Haruhiko Kuroda said the Bank of Japan, too, would act, if necessary, to mitigate any impact on the Japanese economy.

The Shanghai Composite index responded with a bounce of 1.3%, while China’s other markets bounced even more. Commodities such as Brent crude and copper futures also rebounded.

The virus continues to spread, however, with the number of reported deaths hitting 425 and the number of reported cases topping 20,000. Macau, the country’s gambling capital, closed its casinos, while Hong Kong-based airline Cathay Pacific slashed its flights to the Chinese mainland by 90%.

2. Alphabet's transparency disappoints

Alphabet’s new chief executive Sunder Pichai spread more light on the performance of some of the company’s most important operations – and many weren’t too impressed with what they saw.

Alphabet (NASDAQ:GOOGL) said YouTube’s revenue in 2019 was $15 billion, at the lower end of a range of guesses that analysts had had to make prior to the disclosure. For comparison, the company’s Cloud storage business pulled in $10 billion, somewhat more than expected but still comfortably behind rivals Amazon's (NASDAQ:AMZN) AWS and Microsoft’s Azure.

Overall, the group’s results disappointed, with operating income missing forecasts by more than 6% and revenue growth slowing further.

3. Stocks set to open sharply higher

U.S. stock markets are set to open sharply higher again on Tuesday after the Chinese central bank’s intervention steadied the global picture.

By 6:30 AM ET, Dow 30 futures were up 296 points, or 1.0%, while S&P 500 Futures were up 1.1% and the Nasdaq 100 futures contract was up 1.2%.

European market has also joined the risk-on move, with the benchmark Stoxx 600 rising 1.0% and the commodity-heavy FTSE 100 rising 1.3%. That was despite warnings from brewer Carlsberg (CSE:CARLa) and jeweller Pandora (CSE:PNDORA) about the impact of the coronavirus on the outlook for 2020.

Earnings season cranks up a gear after a quiet start to the week, with reports coming from Walt Disney, Ford Motor, Gilead Sciences, Snap, Chipotle Mexican Grill, Chubb and ConocoPhillips(NYSE:COP). Ferrari, Allstate and Royal Caribbean Cruises are also due.

4. Iowa shambles for Dems

The campaign for the Democratic Party nomination got off to a shambolic start as the party’s vote counters failed to announce the result of the Iowa caucuses, citing “inconsistencies in the reporting.”

The party said its data had not been tampered with.

With no official numbers yet available, the respective candidates all talked up their assessment of their performances. However, a number of unofficial counts appeared to suggest that former vice-president Joe Biden had polled well behind rivals Bernie Sanders, Elizabeth Warren and Pete Buttigeig.

5. OPEC officials meet to discuss deeper cuts; API inventories due

Technical experts from the Organization of Petroleum Exporting Countries descended on Vienna for a meeting to build a consensus how they can bring a cratering oil market back into balance.

According to various reports, the experts will consider an extra cut of up to 500,000 barrels a day beyond those already agreed between OPEC and allied producer nations led by Russia. They’ll also discuss moving up a ministerial meeting to review the current arrangements to this month, from the scheduled date in late March.

Earlier, BP (LON:BP) chief financial officer Brian Gilvary said the company expected the coronavirus to cut global demand for the whole of this year by between 300,000 and 500,000 barrels a day. That’s around one-third of all the demand growth predicted by OPEC and the International Energy Agency.

At 10:30 AM ET (1530 GMT), the American Petroleum Institute will release its weekly data on U.S. inventories.

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