NY Open: Wall Street chilled by Chinese cold front

The temporary end to the US government shutdown may have brought civil servants in from the cold, but not Wall Street traders. They are getting a frosty reception from China. More accurately, from American companies with substantial interests in China.

Caterpillar (CAT: NYSE) is getting skinned in early trading after the company’s earnings and forward guidance disappointed analysts. CAT earnings per share of $2.55 fell short of expectations of $2.98 and 2019 forward guidance also disappointed, due to lower than expected demand from China. CAT shares dropped 8.0% as of 14:00 GMT.

China was also blamed for NVIDIA (NVDA: NASDAQ) cutting its Q4 revenue guidance to $2.20 billion from $2.70bn, and it doesn’t even report earnings until February 14. NVDA plunged 15.5% in early trading.

The China and Nvidia reports spooked the rest of Wall Street and sparked a broad sell-off in equities. The three major US indices were deep in the red by 14:00 GMT.
USDCAD is the biggest gainer since the New York open, climbing steadily from 1.3225 to 1.3282, supported by the ongoing drop in oil prices. WTI fell from $52.69 to $51.93/barrel during that period; AUDUSD and NZDUSD are only marginally lower.

EURUSD is a tad higher after bouncing around in a 1.1404-1.1428 range. Prices managed to squeeze higher even after European Central bank president Mario Draghi repeated that weak data underscores the need for stimulus. GBPUSD managed to hold on to overnight gains and as of 14:00 GMT, is unchanged.

WTI oil prices snapped a month-long rally when they dropped below $52.50/barrel this morning. A decisive break below $51.80 targets further losses to $50.55/b. Sellers emerged after Saudi Arabian oil minister Khalid al-Falih said the Venezuela oil crisis is not affecting the oil market. Caution around the US/China trade talks also undermined prices.