Wednesday, 19 February 2020

Markets fall as Apple warning brings back coronavirus concerns

Markets were mostly lower on Tuesday.

The S&P 500 fell 0.3 percent, the STOXX Europe 600 fell 0.4 percent and the Nikkei 225 plunged 1.4 percent.

Markets fell after Apple warned that it will not meet its second-quarter financial guidance because the COVID-19 outbreak in China is affecting its suppliers’ production.

“We haven’t really heard of any peak levels, that’s what’s beginning to sink into investors’ minds,” said Peter Cardillo, chief market strategist at Spartan Capital Securities, of the economic impact of the coronavirus outbreak.

“It took something like a warning from Apple that investors weren’t willing to ignore,” said Connor Campbell, analyst at financial spread better Spreadex.

Tuesday, 18 February 2020

Markets mixed as Japan faces recession while China gets monetary support

Markets were mixed on Monday.

The STOXX Europe 600 rose 0.3 percent and the Shanghai Composite surged 2.2 percent but the Nikkei 225 fell 0.6 percent. The US stock market was closed for a holiday.

Japanese stocks fell after the government announced that the economy contracted at a 6.3 percent annualised rate in the last quarter.

ING said in a report that Japanese consumer spending “slumped following the tax hike in the fourth quarter of 2019” and “will now struggle to do anything except contract further in the first quarter as the impact of Covid-19 weighs on consumer sentiment”.

ING added that “further government spending ... will not stop what started off as a technical downturn from evolving into a full-blown recession”.

The death toll in China from the COVID-19 epidemic jumped to 1,868 on Tuesday after 98 more people died but on Monday, Chinese stocks gained from news that the People’s Bank of China is cutting its one-year medium-term lending rate from 3.25 percent to 3.15 percent as well as injecting liquidity through securities purchases.

Monday, 17 February 2020

Stocks shrug off COVID-19 outbreak fears even as Japanese economy shrinks

The death toll from the COVID-19 epidemic in China jumped to 1,770 after 105 more people died, the National Health Commission said on Monday.

Outside mainland China, Taiwan reported the island's first death from the coronavirus, bringing the number of deaths outside the mainland to five.

Despite the COVID-19 crisis, stocks around the world have been rising. Julia Horowitz at CNN reported that the S&P 500 rose 1.6 percent last week, the STOXX Europe 600 rose nearly 1.5 percent and even the Shanghai Composite managed to rise 1.4 percent.

"Why do stocks continue to rise in the face of anxiety about the coronavirus? Ongoing support from the Federal Reserve, a stable outlook for corporate earnings and fear of missing out may have something to do with it," Horowitz suggested.

"I think the stock market is just under this belief that no matter what comes our way the Fed is going to save us," Peter Boockvar, chief investment officer at Bleakley Advisory Group, was quoted as saying.

Still, things could get worse.

At least it appears to be getting worse in Japan. The number of infections there has more than doubled since Thursday from 29 to 59 on Sunday night. And that is not counting the 355 cases on the Diamond Princess cruise liner off Yokohama.

Health Minister Katsunobu Kato on Sunday said that several cases have not been traceable to the source of infection. He added: "We are now in a new phase and must anticipate a spread of infections."

The coronavirus outbreak will add to problems for Japan's economy, which reportedly shrank at an annualised rate of 6.3 percent in the October-December quarter, the fastest rate of decline in six years.

Saturday, 15 February 2020

Markets mixed as coronavirus death toll rises again

Markets were mixed on Friday.

The S&P 500 rose 0.2 percent to another all-time high but the STOXX Europe 600 fell 0.1 percent.

In Asia, the Shanghai Composite rose 0.4 percent but the Nikkei 225 fell 0.6 percent.

US economic data on Friday were mixed. The University of Michigan consumer sentiment index rose to 100.9 in February from 99.8 last month but industrial production fell 0.3 percent in January, the fourth decline in the past five months.

Meanwhile, the China coronavirus, now officially known as COVID-19, claimed another 121 lives and 5,090 new cases, according to the latest report from China.

Rob Subbaraman, head of global macro research at Nomura, sees a possibly deep downturn in the economy. “The economic data we start getting for February could be a lot worse than people think,” he said.

Indeed, Singapore, with one of the highest reported number of confirmed cases outside China, sees a possible recession.

And Japan, which has reported fewer cases, may actually be experiencing a “stealth outbreak”, with new cases being found to have no connection with China, suggesting transmission within Japan's borders.

Friday, 14 February 2020

Markets fall as coronavirus cases spike

Markets mostly fell on Thursday.

The S&P 500 fell 0.2 percent and the Shanghai Composite fell 0.7 percent while the STOXX Europe 600 was flat.

Markets fell as the coronavirus outbreak in China continued to wreak havoc in the country, with 254 new deaths and a spike in new cases of 15,152, although the latter was partly due to a change in method in counting infections.

Meanwhile, Vietnam reported that a commune of 10,000 residents northwest of the capital Hanoi was put in lockdown due to a cluster of cases there.

Thursday, 13 February 2020

Stocks hit new highs as Powell talks of more debt-buying

Markets rose on Wednesday.

The S&P 500 rose 0.7 percent to a new all-time high, the STOXX Europe 600 rose 0.6 percent to also hit a record high and the Shanghai Composite jumped 1.6 percent.

China reported 2,015 new cases of coronavirus infection and 97 deaths on Wednesday.

However, Scott Wren, senior global market strategist at Wells Fargo Investment Institute, said in a note that the “market seems to be pricing in a virus that will be at least somewhat contained in the nearer term”.

The market could also be counting on the Federal Reserve to help maintain the rally.

In testimony before the Senate Banking Committee on Wednesday, Fed Chairman Jerome Powell the central bank would fight the next economic downturn by buying large amounts of government debt to drive down long-term interest rates.