- Asia Stocks Drop as China Traders Return; Oil Dips. Asian stocks retreated ahead of the reopen of mainland Chinese markets as a deadly virus outbreak showed no signs of slowing. U.S. equity futures edged higher along with the offshore yuan in a sign of some stabilization after the China’s government unveiled support measures. Shares opened lower in Tokyo, Sydney and Seoul, while traders braced for China’s onshore currency and equities to begin trading later on Monday after a holiday. S&P 500 Index futures rose about 0.2% after the gauge slumped 1.8% on Friday. Investors are assessing intervention from China’s central bank, which is providing more than $21 billion of liquidity. Among the weekend’s coronavirus developments, a man died in the Philippines in the first fatality outside China and China’s death toll reached at least 360. Oil fell amid concern demand in the world’s second-largest economy is plunging. Australian bonds climbed with the three-year yield heading for a record low. Japan’s Topix index lost 1.4% as of 9:12 a.m. in Tokyo. South Korea’s Kospi index retreated 1.5%. Australia’s S&P/ASX 200 Index dropped 1.4%. Future on the S&P 500 added 0.3%.
Wall Street Journal:
- Coronavirus Pandemic Spreads To 17,205 Cases, Resulting In 362 Fatalities; 152,000 Under Observations.
- Philippines Reports First Death Due To Coronavirus Outside China; 137,600 Under Observation In China.
- Japan Set To Release 1.2 Million Tons Of Radioactive Fukushima Water Into Ocean, Causing “Immeasurable Damage”.
- Mayor Of City With 6 Million People Next To Wuhan Warns Of “Significant Increase” In Coronavirus Cases This Weekend.
- Asian indices are -2.0% to -1.0% on average.
- Asia Ex-Japan Investment Grade CDS Index 58.0 +1.0 basis point.
- China Sovereign CDS 42.5 +2.25 basis points.
- Bloomberg Emerging Markets Currency Index 65.99 -.01%.
- FTSE 100 futures +.33%.
- S&P 500 futures +.67%.
- NASDAQ 100 futures +.77%.
Before the Open:
10:00 am EST
- Construction Spending MoM for Dec. is estimated to rise +.5% versus a +.6% gain in Nov.
- ISM Manufacturing for Jan. is estimated to rise to 48.5 versus 47.2 in Dec.
- ISM Prices Paid for Jan. is estimated to fall to 51.5 versus 51.7 in Dec.
- Wards Total Vehicle Sales for Jan. is estimated to rise to 16.8M versus 16.7M in Dec..
- None of note
Other Potential Market Movers
- The RBA decision and the Democratic Iowa Caucuses could also impact trading today.
- 9:30 am – 4:00 pm EST
BOTTOM LINE: Asian indices are lower, weighed down by industrial and commodity shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the week.
SOURCE: BETWEEN THE HEDGES – Read entire story here.