Highlights

Wall Street Breakfast

Author: bmotrader   |   Latest post: Fri, 28 Feb 2020, 7:47 PM

 

Wall Street Breakfast: Coronavirus Wreaks Havoc On China's Markets

Author:   |    Publish date:


Worried by the mounting death toll from the coronavirus and drastic efforts to contain it, investors dashed for the exits as Chinese markets reopened following an extended Lunar New Year break (markets have been closed since Jan. 23). Shanghai plunged 7.7%, Shenzhen tanked 8.5% and the tech-heavy Chinext Composite slumped 6.9%, marking the heaviest loss since August 2015 in the aftermath of the bursting of an equity bubble. Officials tried to head off the panic, but to little avail. The PBOC injected $174B into money markets via reverse repo agreements and cut rates on the funds by 10 basis points, while the China Securities Regulatory Commission told some brokerages that their prop traders weren't allowed to be net sellers of equities this week and brokerages were only allowed to sell to meet redemptions.

Two-thirds of China's economy remains closed

More than a dozen Chinese provinces have announced an extension of the current Lunar New Year holiday by more than a week as the nation attempts to halt the rapidly spreading coronavirus that has so far claimed 362 lives, all but one in China. The areas accounted for almost 69% of China's gross domestic product in 2019, according to Bloomberg. Economists now expect that this virus will deal a more severe blow to the economy in the near term than the SARS epidemic, which subtracted an estimated 0.8 percentage point from GDP growth in 2003.


Airlines rush to enforce travel restrictions

New U.S. travel restrictions aimed at combating the spread of the coronavirus took effect on Sunday afternoon, leaving airline employees across the globe scrambling to enforce them. While the three major U.S. carriers - American (NASDAQ:AAL), Delta (NYSE:DAL) and United (NASDAQ:UAL) - have suspended direct flights to China, the TSA has instructed airlines with flights to the U.S. from other countries to screen passengers before boarding to find out whether they've been in China recently. Check-in and gate agents are also required to question travelers, look through recent reservations and possibly their passports for entry or exit stamps, and must work with U.S. Customs and Border Protection to make determinations.

Coronavirus treatment testing

Shares of Gilead Sciences (NASDAQ:GILD) are up 12% premarket after formalizing an agreement with Chinese authorities to study the effectiveness of an experimental Ebola and SARS treatment on patients infected with the coronavirus. "While there are no antiviral data for remdesivir that show activity against 2019-nCoV at this time, available data in other coronaviruses give us hope," the company said in a statement. Trials for the drug will be conducted in Wuhan, the central Chinese city that is ground zero for the current outbreak.
 

Next FAANG (or FAAAM) to report

Get ready for Alphabet's (GOOG, GOOGL) first quarterly report since Sundar Pichai, who had been CEO of Google, took the reins of the parent company (founders Larry Page and Sergey Brin stepped back from day-to-day management in December). Wall Street analysts project fourth-quarter revenue of $46.87B (+19.3% Y/Y), with profits of $12.76 per share (-0.1% Y/Y). Investors are also hoping the tech titan will provide more detailed disclosure around its business lines, Google Cloud and antitrust scrutiny, as well as find a way to scale back losses on non-core "other bets."
 

OPEC+ weighs response as oil slides towards bear market

With crude trading near $51 a barrel - after a slump of about 16% in January - OPEC and its allies are considering calling an emergency meeting. Potential dates being discussed are Feb. 8-9 and Feb. 14-15, though for now the next regular meeting on March 5-6 remains on schedule. OPEC, meanwhile, is holding a meeting of technical representatives - the Joint Technical Committee - on Tuesday and Wednesday to assess the coronavirus's effect on markets and demand, according to delegates.

Johnson's trade vision

"I hope you've got the message by now, we've made a choice, we want a comprehensive free trade agreement, similar to Canada's," Boris Johnson said in his first speech on Brexit since the U.K. left the EU on Friday. "There is no need for a free trade agreement to involve accepting EU rules... any more than the EU should be obliged to accept U.K. rules." Ahead of the speech, EU Brexit negotiator Michel Barnier set out battle lines for the bloc's post-Brexit trade negotiations, including measures to ensure competition remains open and fair, and an agreement on fisheries with "reciprocal access." Sterling -1% to $1.3066.

Forever no longer

Four months after filing for Chapter 11 bankruptcy, Forever 21 has reached a deal to sell off its assets for $81M, a fraction of what the international fashion pioneer was once worth. As part of the deal, Forever 21, which has struggled in the online age, would be sold to a consortium made up of mall operators Simon Property Group (NYSE:SPG) and Brookfield Properties (NASDAQ:BPY), and brand management firm Authentic Brands. The group has been designated as the "stalking horse bidder," meaning the deal remains subject to approval by a judge and other potential buyers have until Feb. 7 to place bids for the company.

New leadership at WeWork

WeWork (WE) is looking to turn over a new leaf by naming real estate industry veteran Sandeep Mathrani as its new chief executive. It's a critical step in the company's bid to rebuild its image following a failed IPO attempt last year that saw the departure of co-founder and former CEO Adam Neumann, a subsequent bailout by major stakeholder Softbank (OTCPK:SFTBY), and steep plunge in valuation to less than $8B (from $47B). Mathrani currently serves as CEO of Brookfield Property Partners' (BPY) retail group, and prior to that he was an executive at real estate firms including Vornado Realty Trust (NYSE:VNO).

Today's Markets

In Asia, Japan -1%. Hong Kong +0.2%. China -7.7%. India +0.3%.
In Europe, at midday, London +0.4%. Paris +0.2%. Frankfurt +0.2%.
Futures at 6:20, Dow +0.4%. S&P +0.4%. Nasdaq +0.5%. Crude flat at $51.56. Gold -0.4% to $1580.90. Bitcoin -0.7% to $9361.
Ten-year Treasury Yield +2 bps to 1.54%

Today's Economic Calendar
9:45 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Construction Spending
4:30 PM Fed's Bostic Speech

Share this

  Be the first to like this.
 


 

5255  3112  425  130 

ActiveGainersLosers
Top 10 Active Counters
 NameLastChange 
 SPY 296.26-1.25 
 IBIO 2.45+1.585 
 CHK 0.275+0.015 
 EEM 40.52-0.15 
 XLF 26.59-0.74 
 BAC 28.50-0.63 
 GDX 26.22-1.93 
 GE 10.88+0.49 
 QQQ 205.80+1.90 
 VXX 22.81+0.81 
Partners & Brokers