Monday, January 27, 2020

Asia Stocks Drop on Virus Fears; Yuan Steadies: Markets Wrap

Asian stocks retreated again on Tuesday as concern over the economic and human impact of China’sdeadly coronavirus rattled global markets. Treasury yields and the yuan steadied after Monday’s declines.

Japanese shares slid, with deeper losses in South Korea and Australia as those markets reopened after holidays. The yen fluctuated as new figures showed the death toll in China from the virus had increased. Chinese and Hong Kong markets remain closed. U.S. futures saw modest gains after the S&P 500 Index fell the most in almost four months. Chinese stock futures stabilized after a near-6% plunge Monday.

Equity Pounding Feels Awful But Is Pretty Much Right on Schedule

Investor concern that China has so far failed to contain the pneumonia-likevirus roiled markets at the start of a week jam-packed with corporate earnings. The outbreak shattered a calm in markets that hasn’t seen a 1% up-or-down move in the S&P 500 since early October.

Traders Eye Technicals to Predict Where Latest Stock Rout Ends

“This is now a sell first, ask questions later situation,” said Alec Young, managing director of global markets research at FTSE Russell. “Markets hate uncertainty, and the coronavirus is the ultimate uncertainty — no one knows how badly it will impact the global economy. China is the biggest driver of global growth, so this couldn’t have started in a worse place.”

China’s financial markets willremain closed until next Monday after authorities extended the Lunar New Year break by three days as they grapple with the virus crisis.

Elsewhere, oil slipped to a more than three-month low. Gold fluctuated.

Rare VIX Inversion Points to Potential End of U.S. Equity Rout

Here are some events to watch out for this week:

  • Tech giants Apple, SAP, Facebook, Samsung and South Korean chip maker SK Hynix announce earnings, as do Boeing, International Paper, GE, United Technologies, Lockheed Martin, Caterpillar, Unilever, Exxon Mobil, Shell and Chevron.
  • Fed policy makers are expected to open 2020 the same way they closed 2019 — by holding interest rates steady Wednesday.
  • Goldman Sachs will hold its first-ever Investor Day on Wednesday.
  • The BOE meeting is highly anticipated Thursday after a series of dovish comments raised speculation policy makers could lower interest rates.
  • The U.S. reports fourth-quarter GDP Thursday.
  • The U.K. is scheduled to leave the European Union Friday.

These are some of the main moves in markets:

Stocks

  • Japan’s Topix Index fell 0.8% as of 10:08 a.m. in Tokyo.
  • South Korea’s Kospi Index fell 2.6%.
  • S&P/ASX 200 fell 1.3%.
  • S&P 500 futures rose 0.4%. The S&P 500 slid 1.6% Monday.
  • FTSE China A50 futures fell 0.1%.

Currencies

  • The Bloomberg Dollar Spot Index was flat.
  • The euro was little changed at $1.1019.
  • The Japanese yen fell 0.1% to 108.95 per dollar.
  • The offshore yuan rose 0.1% to 6.9797 per dollar.

Bonds

  • The yield on 10-year Treasuries was flat at 1.61%.

Commodities

  • West Texas Intermediate crude fell 0.2% to $53.00 a barrel.
  • Gold fell 0.1% to $1,580 an ounce.
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