Thursday February 20th

20-02-2020

Stock futures fall, point to a retreat from record highs

U.S. stock index futures are pointing to a slightly lower open on Wall Street Thursday morning after a record-setting session, as investors continue to monitor the global economic impact of the coronavirus outbreak. Around 7:10 a.m. ET, Dow Jones Industrial Average futures were down 49 points, implying a loss of 47 points at the open. S&P 500 and Nasdaq 100 futures also indicated slight losses at the open. Tech shares led the S&P 500 and Nasdaq Composite to new record highs on Wednesday. China’s National Health Commission on Wednesday reported that 74,576 cases of the new coronavirus have now been confirmed, with 2,118 deaths on the mainland. Coronavirus cases are also spiking in South Korea. The country said confirmed cases have jumped to 82, more than double the previous number of cases. “The coronavirus reminds us just how small the world is,” said Ed Yardeni, president and chief investment strategist at Yardeni Research. “Even as the infection has been largely contained to China, the business ramifications have rippled across the world.” S&P Global Ratings warned in a report on Thursday that Chinese lenders could be hit by as much as $1.1 trillion in questionable loans as the coronavirus ripples through China’s economy, while Goldman Sachs has said that markets are underestimating the potential fallout from the outbreak, suggesting the “risks of a correction are high.” To be sure, China’s central bank cut its one-year loan prime rate by 10 basis points overnight in an effort to mitigate the economic fallout from the coronavirus. A summary of the Federal Reserve’s January meeting also showed the U.S. central bank is monitoring the spread for any impact on the U.S. economy. U.S. jobless claims data for last week is due at 8:30 a.m. ET and January’s leading index reading will be published at 10 a.m. ET. In corporate news, Morgan Stanley is buying e-Trade for $13 billion. The news sent e-Trade shares up more than 20% in the premarket while Morgan Stanley dipped 4.7%. Mainland Chinese stocks surged by the market close on Thursday, with the country cutting its loan prime rate (LPR) as the country grapples with the economic impact of an ongoing coronavirus outbreak. The Shanghai composite jumped 1.84% to around 3,030.15 while the Shenzhen composite soared 2.152% to about 1,886.14. The Shenzhen component advanced 2.43% to 11,509.09. Hong Kong’s Hang Seng index, on the other hand, slipped 0.28% as of its final hour of trading. Elsewhere, shares in Japan rose. The Nikkei 225 added 0.34% to 23,479.15 while the Topix index also advanced 0.16% to 1,674.48. South Korea’s Kospi closed 0.67% lower at 2,195.50. Brent oil prices held near one-month highs on Thursday supported by China’s efforts to boost its economy, a drop in new coronavirus cases at the epicenter of the outbreak and supply concerns in Venezuela and Libya. Brent crude futures were up 29 cents at $59.41 a barrel, after climbing as high as $59.71 earlier in the day. West Texas Intermediate crude futures climbed 16 cents to $53.45 per barrel. Gold edged lower on Thursday after China announced more measures to limit the economic impact from coronavirus epidemic, although a rise in number of new cases in South Korea kept bullion close to a near seven-year peak. Spot gold was down 0.1% at $1,610.31 per ounce. U.S. gold futures rose 0.1% to $1,613.30.