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Equity Markets Fall, U.S. GDP Better Than Expected, Corona Virus Deaths Rise

By:
Thomas Hughes
Published: Jan 30, 2020, 14:04 UTC

Global markets falter as the corona virus spreads but strong U.S. GDP helped provide some support.

Bull sculpture in front of Frankfurt Stock Exchange building Bul

The U.S. Futures Are Down In Early Trading

The U.S. futures are down in early trading after China reported an increase in corona virus-related deaths. The number of cases is now more than 7700 with over 170 deaths. India is the latest to report a confirmed case. the Dow Jones Industrial Average was down as much as -0.80% in early trading but narrowed the loss after the 4th quarter GDP figures. The S&P 500 is also indicated down about -0.70% while the NASDAQ Composite trails with losses closer to -0.50%.

In economic news, U.S. 4th quarter GDP came in better than expected at 2.1%. The news helps relieve some fear but traders are warned, the data is rear-looking and does not take the coronavirus into account. While the spread of the disease is slowing it is not contained and will have an impact on global GDP. Starbucks is the most noteworthy to mention the virus stating it had closed half its China stores and altered plans to raise guidance.

In earnings news, a raft of top-rated U.S. companies reported earnings since the close of Wednesday trading. While results are mixed, the general run is better than expected. Tesla shares are up nearly 9.0% in the premarket session after it reported the second consecutive quarter of profits. The company is on track to accelerate revenue and EPS this year provided the coronavirus outbreak does not shut down the Chinese economy.

European Markets Fall, Manufacturing Sentiment Rises

The European equities markets are moving lower at midday. The French CAC is in the lead with a loss of -1.60% while the FTSE and DAX are close behind. The move is driven by the spreading Wuhan Virus but the focus is not only there. The Brexit will occur tomorrow at 11PM London time and may send shockwaves through the global economy. In economic news, EU manufacturing confidence hit a five-month high and point to a solid start to 2020.

In stock news, shares of H&M are up about 9% at midday. The fashion house reported its first profit in years and a reshuffle to management that bodes well for shareholders. Deutsche Bank is also moving higher after it reported earnings. The bank reported an uptick in spending related to restructuring efforts and shares gained 1.8%. Energy giant Royal Dutch Shell, however, saw its shares decline after it reported a sharp decline in profits and a slower pace of share buybacks.

Asian Plunges, Coronavirus Threatens 2020 GDP Outlook

Asian markets plunged in Thursday trading due to threats the coronavirus will have a deep impact on economic activity this year. All major trading nations have reported cases of the outbreak even as officials clamp down on travel. The Shanghai Composite and Hong Kong Hang Seng both shed about -2.70% for the session while others posted less severe declines. Shares of travel and leisure stocks are the worst hit with losses in the range of -2.0% to -5.0%.

About the Author

Thomas has been a professional options trader and investor since October 2005. At that time, Thomas was introduced to financial markets, technical analysis, and financial market analysis. He tracks economic data from the worlds leading economies, corporate earnings, equities, currency, commodities, and cryptocurrencies.

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