The Monday Market Minute
- Global stocks turn red as coronavirus cases accelerate past 40,000 and the number of fatalities overtakes that of the SARS pandemic in 2003.
- China confirms 907 deaths, with at least 97 on Sunday alone, amid the spreading virus, as the world's second largest economy attempts to re-start its economic engine following and extended New Year break.
- World stocks drift lower as investors count the cost of factory closures and business disruption in Asia, while moving cash into safe-haven assets such as the dollar, the yen and U.S. Treasury bonds.
- Global oil prices fall deeper into bear market territory as China demand weakness offsets OPEC production cut speculation.
- U.S. equity futures suggest modestly weaker open on Wall Street ahead of earnings from Allergan and Restaurant Brands before the start of trading.
U.S. equity futures sputtered Monday, while global stocks traded in the red for much of the overnight session, as China's factories and businesses started the slow and uneven process of returning to work following an extended Lunar New year break amid the rapidly-spreading coronavirus.
China has pledged some $10 billion to combat the pandemic, which has killed at least 900 people and infected more than 41,000, as authorities from the World Health Organization prepare a visit to Beijing to assist with the procedures.
Swathes of the world's second largest economy, however, remain either in actual or voluntary lockdown, with businesses closed, transportation links severed and factories shuttered, as citizens attempt to avoid contracting the respiratory illness, which is thought to have originated from an illegal food market in the central industrial city of Whuan.
Since then, the virus has spread to at least 27 countries -- including Japan, the U.K. and the United States -- and slowed trade and economic prospects for much of the Asia region.
With analysts forecasting a sharp slowdown in China's economy over the first quarter, and prolonged weakness until the virus is either contained or a feasible vaccine is found, markets in Asia have struggled to find ground, with stocks trading weaker again Monday following a post jobs report sell-off on Wall Street Friday.
U.S. equity futures look similarly challenged in early European trading hours, with contracts tied to the Dow Jones Industrial Average indicating a 35 point slip and those linked to the S&P 500 priced for a 2 point decline heading into a session bereft of both economic data releases and top-tier earnings reports.
Corporate earnings, however, have provided U.S. stocks with some support over the past three weeks, and with around two thirds of the S&P 500 reporting quarterly profits so far, analysts expect collective earnings to increase by around 2.1% from last year to $342.8 billion.
Still, China's ongoing shutdown, as well as factory weakness in Europe, has put pressure on global commodity markets and cast a defense tenor across most financial markets.
European stocks opened in the red Monday, with the Stoxx 600 benchmark slipping 0.13% by mid-day of trading while Britain's FTSE 100 fell 0.15% even as the pound slumped to a 2.5 month low of 1.2878 against the dollar.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, has risen to a three-month high of 98.67 this week, while benchmark 10-year Treasury bond yields have slipped back below the 1.6% level to trade at 1.575%.
Global oil prices, meanwhile, remain mired in bear market territory despite efforts from OPEC producers, and non-member allies such as Russia, to orchestrate a further 600,000 barrels per day in production cuts in order to arrest the ongoing slide in crude prices, which have fallen more than 20% since early January.
Brent crude futures contracts for April delivery, the global benchmark for pricing, were last see seen 11 cents lower from their Friday close in New York and trading at $54.36 per barrel, while WTI contracts for the same month were seen 11 cents lower at $50.21 per barrel.
Overnight in Asia, Japan's Nikkei 225 slipped 0.6% to end the session at 23,685.98 points while the region-wide MSCI ex-Japan index was marked 0.4% lower heading into the close of trading.