Dow Futures Rise, Dollar Gains as Coronavirus Threat Lingers Over Global Markets

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Wall Street looks on pace to record a solid weekly gain amid the lingering coronavirus concerns, but the rising number of new infections has kept investors cautions.

The Friday Market Minute

  • Global stocks mixed, but heading for weekly gains, as investors parse data on coronavirus infections from China while cheering solid underlying economic data in the United States.
  • China confirms 5,000 new COVID-19 cases, with deaths rising by 121 yesterday to 1,380; Japan records its first COVID-19 fatality following the death of an 84-year old woman near Tokyo.
  • European stocks little-changed, while the Euro hovers at 3-year lows against the dollar, after German GDP flatlines over the fourth quarter of 2019.
  • Global oil prices edge higher, on pace for their first weekly gain in six, even as demand forecasts weaken in the wake of China’s virus-lead slowdown.
  • U.S. equity futures suggest modest gains on Wall Street at the opening bell ahead of retail sales and import price data at 8:30 am Eastern time.

Wall Street futures edged higher Friday, pointing all three benchmarks towards solid weekly gains, as investors continue to parse data on the coronavirus outbreak in China while focusing on solid underlying strength in the U.S. economy.

Although health experts and investors have been questioning the veracity of data from China for a number of days now, officials have indicated that another 5,000 people have been confirmed to have contracted the virus — known as COVID-19 — taking the overall total to just under 65,000. 

The number of deaths from the virus, which presents with symptoms similar to that of pneumonia, rose by 121 yesterday to 1,380, China’s National Health Commission said, while authorities in Japan reported the first COVID-19 fatality on Friday following the death of an 84-year old woman near Tokyo.

Investors have largely ignored the grim reality of the virus this week, lifting U.S., European and global stocks to fresh all-time highs even as cash continues to find its way into defensive assets such as Treasury bonds, gold, the dollar and the yen. 

In fact, the Treasury itself was able to sell $19 billion worth of 30-year bonds at a record low yield of 2.061% yesterday, indicating a healthy appetite for fixed income assets even as U.S. stocks grind out a weekly gain of around 1.5% amid the coronavirus uncertainty.

It’s been a solid week for earnings on Wall Street, as well, and quarterly updates last night from Nvidia (NVDA) – Get Report, Roku (ROKU) – Get Report and DexCom (DXCM) – Get Report, which smashed forecasts on stronger-than-expected glucose monitoring sales, added to evidence of a strong underlying U.S. economy.

Futures contracts tied to the Dow Jones Industrial Average, which has gained just over 3.1% so far this year, are primed for a 71 point opening bell gain while those linked to the S&P 500, which is up 1.55% for the week, are guiding to a 10.2 point advance for the broader benchmark.

Still, with investors worried about the pace of COVID-19’s advance in China, as well as weakening economic data in Europe, the U.S. dollar remained firmly bid in overnight trading, rising 0.02% to a fresh four-month high of 99.09 against a basket of its global peers.

European stocks, however, were little-changed at the start of trading Friday, with investors failing to ride gains from the weakest euro in three years, following data from Germany showing the region’s largest economy record no growth over the final three months of last year.

The Stoxx 600 benchmark was seen 0.04% higher in the opening minutes of trading in Frankfurt, while Britain’s FTSE 100 slipped 0.1% lower in London.

Overnight in Asia, stocks were mixed in a choppy session that failed to find direction following last night’s modest sell-off on Wall Street, with Japan’s Nikkei 225 slipping 0.6% to close as 23,687.59 points while bets on near-term stimulus from authorities in China helped mainland stocks, boosting the region-wide MSCI ex-Japan benchmark to a 0.25% gain heading into the final hours of trading.

Global oil prices were also edging higher Friday, on pace for their first weekly gain in six, even as analysts around the world — as well as OPEC, IEA and Energy Department officials — trim their near-term demand forecasts in the wake of China’s coronavirus slowdown, which by some estimates has kept nearly 80% of migrant workers from returning to factories this week.

Brent crude futures contracts for April delivery, the global benchmark for pricing, were last see seen 5 cents higher from their Thursday close in New York and trading at $56.39 per barrel, while WTI contracts for the same month were seen 8 cents higher at $51.50 per barrel.