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Vladimir Zernov

Focus Shifts From Monetary Stimulus To Coronavirus

S&P 500 futures are losing more than 3% in premarket trading as the situation with coronavirus continues to worsen in the U.S. and elsewhere in the world.

According to data from Johns Hopkins University, 189,633 coronavirus cases have been recorded in the U.S. The U.S. is followed by Italy with 105,792 cases and Spain with 102,136 cases.

The situation in Spain continues to deteriorate in a rapid fashion, and the country is set to have more coronavirus cases than the previous leader Italy in the next few days.

The U.S. President Donald Trump has warned Americans that the next two weeks would be very painful. Currently, U.S. health experts estimate that coronavirus could kill 100,000 – 240,000 Americans. It is not surprising that the market is worried about this potential scenario.

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Oil Stocks Have Rebounded But Oil Prices Are Near Lows

Oil failed to produce any meaningful rebound on hopes that U.S. and Russia can initiate talks on potential production cuts. As a result, WTI oil continues to trade near the $20 level.

At the same time, stocks of major oil companies like Exxon Mobil, Chevron, Total, BP, Royal Dutch Shell have experienced major rebounds from lows reached in mid-March.

These stocks can find themselves under increased pressure if the general market fails to show more upside while oil stays near $20.

In addition, the month of April has just began, and most countries have implemented virus containment measures in various forms. April is set to be the worst month for oil demand in recent history, and some analysts project that world oil demand could contract by 25% compared to normal levels.

Is Amazon Bulletproof?

Amazon shares have received plenty of support from investors who believe that lockdown measures will provide a boost to Amazon’s business. As a result, the company’s stock is up about 5% year-to-date while the S&P 500 has lost roughly 20%.

However, it remains to be seen whether Amazon will continue to report solid numbers as the upcoming recession provoked by virus containment measures will put pressure on disposable incomes of most customers.

Also, Amazon shares could be used as a “fear gauge” since they have played the role of a safe haven asset in these unprecedented times. A sharp sell-off in Amazon could indicate a full-blown panic in the markets, while a positive performance may mean that investors still hope for a normal resolution of the current crisis.

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