Trade of the Day: Stocks tumble across the world on virus fears; yen and US Treasuries attract safety bid.
Quote of the Day: “For sure the virus will stunt economic growth further and that will translate into a period of low growth and low rates for longer than people think,” said Warut Promboon, managing partner at credit research firm Bondcritic Ltd. “In terms of China, I am not worried too much as it is not a free economy and things can be done quickly and in a more subtle way to rectify the situation. I am more worried about HK and how slowing China could put a lid on HK economy’s coffin.”
Stock of the day: China Molybdenum fell as much as 8% after it warned shareholders profits for 2019 would fall by as much as 84% after market prices of the company’s main products, cobalt and tungsten products, dropped significantly.
Number of the Day: $100 billion Market value threshold crossed by electric car maker Tesla for the first time overtaking the worth of Volkswagen, the world’s biggest carmaker by volume.
Tip of the Day: “We like (Indian) banks with high provision cover on corporate NPLs, stronger liability franchises, and large enough operating profit to digest asset-quality surprises from emerging risks,” said Jefferies analysts in a note published on Thursday. “We prefer Axis, ICICI, SBI and HDFC Bank as RoE normalizes in FY20-21E. Among NBFCs, we like BAF (strong growth visibility, consumer cross-sell and better liability management) as well as MMFS (cyclical recovery, rural revival, strong parentage).”
Investors dumped risky assets as they assessed the spread of the coronavirus with Chinese authorities clamping down on the city of Wuhan, the origin of the virus. So far, there have been 17 deaths and 800 confirmed cases with infected cases reaching Japan, South Korea, Taiwan, Thailand, Hong Kong and the United States.
Chinese health officials have confirmed that the new virus can spread between people, but do not believe it to be as serious as SARS or MERS. The moves come ahead of the week-long holiday beginning Friday, which involves the largest human migration on the planet with three billion trips expected to be made. The virus outbreak has made authorities more vigilant about the mass movement and forced many Chinese people to reconsider plans to travel to their hometowns, particularly trips to or through Wuhan. The MSCI Asia Pacific ex-Japan index fell 1%, the Nikkei 225 slid 0.98% and the Australian S&P ASX 200 was 0.63% lower. Hong Kong’s benchmark Hang Seng index slipped 1.52%.
European stocks also felt the chills from the virus spread with the Stoxx Europe 600 Index down 0.2%, although the US markets appear to be less pessimistic with the benchmark futures trading flat.
European markets will also take their cue from the European Central Bank’s policy decision later in the day. While ECB President Christine Lagarde is expected to unveil a strategy review, analysts also are watching for a hawkish tone given the inflation outlook.