That move might be a bit premature as the coronavirus is still front and centre in the news and the death toll has now risen to 132 people in China – that’s more than SARS took in the country.
The market exception was Hong Kong, where they returned from the Lunar New Year holiday and played catch up on the sell-off, losing about 3% by the end of the day.
Starbucks have closed about half of their outlets in China and have warned that profits will be affected and the White House hasn’t ruled out suspending flights from China – though if they get round to doing that it will probably be closing the stable door long after the horse has bolted.
Analysts are concerned that this could be the catalyst that shocks the world into recession, but an interesting op-ed from a Yale economics professor, writing for project-syndicate, points out that there are a lot more shocks that could turn us to recession than we care to think about – taking the US-Iran skirmish a few weeks ago, or the US-China trade dispute before that – and these don’t necessarily end in disaster. What the article does point out though is that there is a lot less of a buffer to cushion a fall than there historically has been.
Gold’s had a good run throughout this, with prices now hitting a seven year high. Though the asset has moved back a bit over the last 24 hours, analysts are saying that the wider backdrop of middle east tensions, trade uncertainty and central banks’ monetary policy experiments are playing into the hands of a bullish overall theme.
Elsewhere in the news; Airbus has agreed to pay a €3.6bn to settle a corruption and bribery probe which revolved around the company using middlemen in its sales. The settlement needs to be signed off by courts in the UK, France and the US and those hearings will all take place on Friday of this week. Considering they make around €5bn a year in pre-tax profits and are currently seeing a massive upsurge in orders courtesy of Boeing’s issues, we’d imagine they’re pretty pleased with the outcome.
Apple have released another set of record breaking earnings, beating forecast revenues by about $4bn, totalling just shy of $92bn in revenues for the last quarter! Their market cap is now $1.39 trillion dollars… they may have an issue going forward as some of their supply chain is based in the Wuhan area of China and therefore they’re going to be subject to disruption.
On an impeachment note; both the prosecution and defense have wrapped up their opening arguments, but it’s outside the court where the fun happened: former National Security Adviser John Bolton has written a book and a draft of that was seen by the New York Times… The draft contains damning allegations that the president directly withheld the aid to Ukraine (and he should know, he was in the room). This now puts a lot of pressure on the Republicans to allow witnesses testimony in the proceedings. The main irony here is that during his time as security adviser, John Bolton was a Democrats worst nightmare!
Today’s a busy day on the data sheet, but the highlight will be the Federal Reserve rate announcement and, more importantly, the forward guidance that they give over where rates might go and when. The Dollar is trading at the top of its recent ranges and indications that rates might hold out for a while longer before being cut could push that trend further.
Have a great day