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Daily World Financial News
US Market
The major U.S. index futures are currently pointing to a higher open on Tuesday, with stocks likely to regain some ground following the sell-off seen in the previous session.
Bargain hunting may contribute to initial strength on Wall Street, as traders look to pick up stocks at reduced levels on the heels of yesterday’s steep drop.
The Dow suffered its biggest point and percentage drop in two years on Monday, as traders worried about the impact of the coronavirus outbreak that has spread far beyond China to Europe and the Middle East.
The markets may also benefit from a positive reaction to earnings news from companies like Home Depot (HD) and Macy’s (M).
Home Depot and Macy’s are both moving higher in pre-market trading after the retailers reported quarterly results that exceeded analyst estimates on both the top and bottom lines.
On the other hand, MasterCard (MA) and United Airlines (UAL) have warned about the potential impact the coronavirus outbreak will have on their 2020 results.
MasterCard and United join a growing list of companies that have warned about the potential impact of the outbreak, which may keep buying interest somewhat subdued.
Stocks moved sharply lower during trading on Monday, extending the notable pullback seen late last week. With the steep drop on the day, the Dow ended the session at its lowest closing level in well over two months.
The major averages remained firmly negative throughout the session after an initial nosedive. The Dow plunged 1,031.61 points or 3.6 percent to 27,960.80, the Nasdaq plummeted 355.31 points or 3.7 percent to 9,221.28 and the S&P 500 tumbled 111.86 points or 3.4 percent to 3,225.89.
The sell-off on Wall Street reflected concerns about the spread of the coronavirus amid a spike in the number of confirmed cases outside of China.
South Korea announced a total of 231 new coronavirus cases earlier today, leading the government to raise the coronavirus alert to its highest level.
A jump in confirmed coronavirus cases in Italy as well as new cases in Middle East countries like Iraq and Afghanistan also added concerns about the outbreak escalating into a pandemic.
The World Health Organization said it is worried about the growing number of cases without any clear link to China.
Traders shrugged off concerns about the coronavirus earlier this month, helping propel stocks to new record highs amid optimism the outbreak would quickly be contained.
However, the continued spread of the virus along with several companies warning about the financial impact seems to have traders reassessing their positions.
Energy stocks turned in some of the market’s worst performances on the day, moving sharply lower along with the price of crude oil. Crude for April delivery plunged $1.95 to $51.43 a barrel amid concerns about the outlook for demand.
Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index plummeted by 7.2 percent, the NYSE Arca Oil Index tumbled by 5 percent and the NYSE Arca Natural Gas Index dove by 4.2 percent.
Worries about global demand also contributed to substantial weakness among steel stocks, as reflected by the 4.7 percent nosedive by the NYSE Arca Steel Index. The index fell to its lowest closing level in over four months.
Semiconductor, computer hardware, brokerage and transportation stocks also saw significant weakness on the day, reflecting broad based weakness on Wall Street.
Meanwhile, gold stocks were among the few groups that bucked the downtrend, with the NYSE Arca Gold Bugs Index climbing by 1.5 percent to its best closing level in well over three years. The strength among gold stocks came amid a spike by the price of the precious metal.
U.S. Economic Reports
Standard & Poor’s is scheduled to release its report on home prices in major metropolitan areas in the month of December at 9 am ET.
At 10 am ET, the Conference Board is due to release its report on consumer confidence in the month of February. The consumer confidence index is expected to rise to 132.5 in February after climbing to 131.6 in January.
The Treasury Department is scheduled to announce the results of this month’s auction of $40 billion worth of two-year notes at 1 pm ET.
At 3 pm ET, Federal Reserve Vice Chairman for Supervision Richard Clarida is due to speak about the economic outlook and monetary policy at the 36th annual NABE conference in Washington, D.C.
Stocks in Focus
Shares of Perrigo (PRGO) are moving sharply higher in pre-market trading after the generic drug maker said the FDA has approved its abbreviated new drug application for a generic version of asthma drug ProAir HFA.
Electronics test and measurement equipment Keysight Technologies (KEYS) may also see initial strength after reporting fiscal first quarter results that exceeded analyst estimates on both the top and bottom lines.
Shares of HP Inc. (HPQ) may also move to the upside after the computer and printer maker reported better than expected fiscal first quarter results.
On the other hand, shares of Shake Shack (SHAK) are likely to come under pressure after the burger chain reported a wider than expected fourth quarter loss on revenues that missed analyst estimates.
Europe
European stocks have turned lower over the course of the session amid continued worries about the coronavirus outbreak that has spread far beyond China to Europe and the Middle East.
On the data front, the second estimate of fourth quarter German GDP published today showed that Europe’s largest economy remained in stagnation in the fourth quarter of 2019 due to Brexit uncertainty and international trade conflicts.
While the U.K.’s FTSE 100 Index has slid by 0.8 percent, the French CAC 40 Index is down by 0.6 percent and the German DAX Index is down by 0.4 percent.
Leoni AG shares have moved sharply lower. The provider of energy and data management solutions in the automotive market reported 2019 preliminary sales of 4.8 billion euros, lower than the prior year’s 5.1 billion euros.
Dutch consumer electronics giant Philips Electronics NV has also moved to the downside. The company said it is another step closer to becoming carbon-neutral in its own operations in 2020, with its U.S. and Dutch facilities now 100 percent-powered by renewable electricity.
AstraZeneca is posting a modest loss. The drug major said it has agreed to sublicense its global rights to Movantik, a peripherally acting mu-opioid receptor antagonist indicated for the treatment of opioid-induced constipation, to RedHill Biopharma.
On the other hand, Prudential has moved notably higher after a U.S. hedge fund and activist investor took a near-$2 billion (£1.5 billion) stake in the London-based insurer and called for it to separate into two companies.
Hammerson, a British property development and investment company, has also moved to the upside despite posting a wider loss for full year 2019 due to higher revaluation losses on properties and other net losses.
Asia
Asian stocks ended mixed on Tuesday as the pace of new coronavirus infections slowed in China and South Korea said it aims to test more than 200,000 members of a church at the center of a surge in coronavirus cases.
Countries around the world stepped up efforts to prevent a pandemic, with the U.S. pledging $2.5 billion to fight the disease.
Chinese stocks ended off their day’s lows as investors cheered reports of a continued drop in new virus cases outside Hubei.
The benchmark Shanghai Composite Index ended down 18.18 points, or 0.6 percent, at 3,013.05, while Hong Kong’s Hang Seng Index rose 72.35 points, or 0.3 percent, to 26,893.23.
Japanese stocks nosedived to hit a four-month low as trading resumed after a long holiday weekend for the emperor’s birthday.
The Nikkei 225 Index tumbled 781.33 points, or 3.3 percent, to 22,605.41 on fears that the coronavirus outbreak could escalate into a pandemic. The broader Topix closed 3.3 percent lower at 1,618.26.
The yen’s sharp rebound over the past couple of sessions hit automakers, with Honda Motor, Toyota, Nissan and Mazda Motor losing 3-7 percent. Central Japan Railway slumped 6.3 percent, East Japan Railway declined 2.9 percent and Keisei Electric Railway lost 5.5 percent.
Market heavyweight SoftBank gave up 3.6 percent and Fast Retailing retreated 4.2 percent. Meanwhile, Fujifilm Holdings rallied 2.8 percent after reports that Japan is mulling using the company’s anti-flu drug Avigan to treat the coronavirus.
Australian markets plunged for the second straight day on fears of a coronavirus pandemic. The benchmark S&P/ASX 200 Index fell 111.70 points, or 1.6 percent, to 6,866.60, while the broader All Ordinaries Index ended down 111.60 points, or 1.6 percent, at 6,953.80.
Mining heavyweights BHP and Rio Tinto fell around 2 percent, while energy stocks such as Woodside Petroleum, Santos, Origin Energy and Oil Search lost 2-3 percent.
Treasury Wine Estates slumped 4 percent after the company downgraded its profit guidance for a second time this year. Serko declined 3.3 percent after the online travel and expense management business issued a coronavirus-related warning.
Vitamin maker Blackmores dropped 1.8 percent as it reported a 46 percent plunge in first half profit and flagged trouble from the coronavirus.
On the other hand, artificial intelligence data services company Appen surged 6.5 percent after posting strong full-year results.
Seoul stocks rebounded after data showed the pace of the coronavirus spread slowed in the country compared to a day earlier. Investors also pinned hopes on policy measures to blunt the economic impact of the epidemic. The benchmark Kospi jumped 24.57 points, or 1.2 percent, to 2,103.61.
Finance Minister Hong Nam-ki said on Monday he has advised the government to start the review and execution of a supplementary budget to cushion the virus’ impact.
Commodities
Crude oil futures are inching up $0.14 to $51.57 a barrel after plunging $1.95 to $51.43 a barrel on Monday. Meanwhile, after spiking $27.80 to $1,676.60 an ounce in the previous session, gold futures are tumbling $23.90 to $1,652.70 an ounce.
On the currency front, the U.S. dollar is trading at 110.57 yen compared to the 110.72 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.0841 compared to yesterday’s $1.0854.
