UK Economy Stagnates In Q4

The UK economy stalled in the fourth quarter as uncertainty around Brexit and the general election weighed on investment and spending, first estimates from the Office for National Statistics showed Tuesday.

Gross domestic product remained unchanged from the previous three months, as expected, after expanding by a revised 0.5 percent in the third quarter.

“There was no growth in the last quarter of 2019 as increases in the services and construction sectors were offset by another poor showing from manufacturing, particularly the motor industry,” ONS Head of GDP Rob Kent-Smith said.

The underlying trade deficit widened, as exports of services fell, partially offset by a fall in goods imports, Kent-Smith noted.

Although the economy failed to grow in the fourth quarter, this is ‘old news’ for markets, James Smith, an ING economist, said.

Optimism has increased among businesses, and while this may not fully translate into faster growth, it would take a more material deterioration in UK activity to convince the Bank of England to cut interest rates, he noted.

On a yearly basis, economic growth slowed marginally to 1.1 percent from 1.2 percent a quarter ago.

In the fourth quarter, the dominant service sector grew 0.1 percent, which was the weakest quarterly growth since the second quarter of 2016.

Industrial production dropped 0.8 percent led by the weakness in manufacturing. Manufacturing output was down 1.1 percent driven by a decrease in transport equipment output with several factories going ahead with planned shutdowns in November.

Meanwhile, construction output was up 0.5 percent underpinned by increases in private commercial, public new housing and non-housing repair and maintenance.

The expenditure-side breakdown showed that private consumption, government consumption and net trade contributed positively to growth, while gross capital formation subtracted from growth in the fourth quarter.

Household spending grew only 0.1 percent, while government spending climbed 2.1 percent, the most since the first quarter of 2012.

Gross fixed capital formation declined 1.6 percent. Business investment dropped 1 percent, in contrast to a 0.2 percent rise in the third quarter.

In the fourth quarter, the visible trade deficit narrowed to GBP 15.069 billion from GBP 29.480 billion in the previous three months.

Exports grew 10.1 percent sequentially after a 10.2 percent rise in the September quarter. Imports decreased 4 percent after a 2.7 percent increase in the previous quarter.

In the whole year of 2019, the economy expanded at a slightly faster pace of 1.4 percent after rising 1.3 percent in 2018.

Breaking this down by sector, services grew 1.8 percent in 2019 and construction advanced 2.5 percent, while production fell 1.3 percent.

In December, the economy recovered driven by growth in services, the ONS said. Monthly GDP rose 0.3 percent, offsetting a 0.3 percent fall in November.

Services output increased 0.3 percent, almost entirely reversing a 0.4 percent drop in November. Construction advanced 0.4 percent.

Industrial production gained 0.1 percent, after a 1.1 percent fall in November. Likewise, manufacturing advanced 0.3 percent after falling 1.6 percent a month ago.

On a yearly basis, industrial production decreased 1.8 percent, after falling 2.5 percent. Manufacturing eased 2.5 percent versus a 3.3 percent drop in November.

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Coronavirus Kills Chinese Film Director/Executive & Multiple Family Members

An executive and director who worked with Hubei Film Studios in Wuhan, China, has died after contracting coronavirus, along with three other members of his immediate family. Chang Kai, 55, succumbed to pneumonia caused by the coronavirus on February 14, Hubei said on social media. His father and mother reportedly died in the preceding days, while his sister also died on February 14.

According to reports, Chang’s father was the first to fall ill but was unable to be treated in a hospital due to a lack of space. Chang’s wife also has the disease, while a son remains in London.

Chang has been referred to in the media as a film director, though he had no known major credits. Hubei — located in Wuhan, the epicenter of the coronavirus outbreak — described him as the director of the Xiangyinxiang external liaison office, which was established by the Central Committee’s Propaganda Department to promote Chinese culture.

The coronavirus now has claimed at least 1,770 lives in mainland China.

Although some studio work has slowly resumed, the epidemic is impacting several facets of China’s entertainment industry including box office as movie theaters remain shuttered across the nation and with no discernible date to come back online.

Impact also is being felt in the region with a drag on overall box office, while organizers of Hong Kong Filmart stepped off the market’s March dates, opting to postpone. Elsewhere, the Berlin Film Festival is taking precautions but has seen several cancellations from Chinese delegates for the EFM.

 

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I Flew to See My Parents and Ended Up in Coronavirus Quarantine

I felt hundreds of eyes staring as my heart pounded, blood rushed to my face and sweat dripped down the back of my neck.

I had just stepped off the plane at Seoul’s Incheon International Airport, and this wasn’t what I’d expected. For weeks I’d been covering the coronavirus outbreak for Bloomberg News in Hong Kong — tracking the case counts, the travel restrictions and all the rest.

My trip to South Korea on Saturday was meant to be uneventful: I’d visit my parents and stock up on supplies of hand sanitizer and other basics that were tough to find in Hong Kong.

That was the plan, at least, until the quarantine officer — decked out in head-to-toe protective gear — pointed the temperature gun at my forehead. The next 24 hours would give me a newfound appreciation for the extraordinary efforts underway to contain the virus and the emotional toll felt by those who’ve been marked as its next potential victims.

The officer struck a worried tone as she read out my temperature: 37.5 degrees Celsius (99.5 degrees Fahrenheit).

“We need you to sit back here and check your temperature again in 10 minutes,” she said. “Maybe it’s because you’re wearing a coat, so take it off.”

The second reading: 37.5 degrees Celsius. “I’m sorry, but you’re going to have to meet with a doctor,” she said.

My fellow passengers watched as I was escorted around the corner to a temporary doctor’s office. I had been called out as potentially contaminated, a threat to public health. A group of tourists gawked as they passed by, speeding away only after they saw the quarantine sign.

The doctor interviewed me and a few others one by one, before telling us that we’d all be held in a nearby facility until our test results came back.

I called my mom, trying to sound calm: “I don’t want you to freak out, but I’m not going to be able to come home tonight,” I said. “The doctor told me it’s probably nothing, but they have to be absolutely sure.”

I could hear her struggling to keep her composure, but we agreed it was for the best. My dad has cancer and the last thing I wanted was to give him the virus. I promised mom I’d be fine and hung up.

That’s when I met Irma, who had traveled to Seoul from Hong Kong for a holiday. Her mom was on the other side of the office partition. They didn’t speak much English or Korean, so I helped them convince one of the officers to allow Irma’s mom to take her daughter’s luggage. He eventually agreed.

“I did something good today,” I said to myself. “So maybe something good will happen to me in return.”

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Rare Release of Xi’s Speech on Virus Puzzles Top China Watchers

We waited four hours before being escorted to an ambulance, which took us to a temporary quarantine facility inside the airport. It was nice having Irma next to me. I knew nothing about her, but her presence made me feel less alone.

As a doctor checked us into our rooms, he explained what would happen over the next few hours (mostly temperature checks and sample collections). The most important rule: “Do not come out until we say you can.”

“Bye Irma,” I said. “Hopefully we don’t have it.”

She smiled. I wondered if I’d ever see her again.

After about 30 minutes, dinner arrived in a plastic container. It was a pleasant surprise: rice with fried egg, bulgogi, stir-fried kimchi, quail eggs with soy sauce, pickled vegetables, deep fried shrimp and chicken, a beef patty and potato salad.

Several hours later a doctor took my temperature, collected a cough sample and scraped mucus from inside my nose. He had kind eyes, which was all I could see through his full body suit.

Exhausted, I fell asleep. I dreamed of taking my temperature — over and over and over again.

When I awoke three hours later, I relieved bouts of anxiety by watching puppy videos on my phone, writing, taking cold showers and constantly checking my temperature, which had fallen back into a normal range between 36.6 and 37.2 degrees Celsius. The quarantine had made me obsessed with decimals.

When my test results finally arrived — no trace of the coronavirus — I had to fight back tears of relief. I left the facility with several others, including Irma. We each had a certificate from the Ministry of Health and Welfare declaring us virus free.

We were the lucky ones. The outbreak has infected more than 71,000 people globally and killed 1,775, almost all of them in China. Millions of people in cities like Wuhan have been on lockdown in their homes or government facilities for weeks.

While some health experts are hopeful the pace of new cases may soon peak, the risk of a worsening epidemic can’t be ruled out. Many of those who get infected don’t show symptoms.

Before my quarantine, I didn’t fully appreciate how quickly and completely people can be stigmatized at a time like this.

Now I know that behind the virus case numbers we all check every morning is a person like me who probably feels scared, isolated and in need of a little compassion.

— With assistance by Marc Daniel Davies

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Apple Won’t Meet Quarterly Revenue Target Due to Coronavirus

Apple Inc. doesn’t expect to meet its revenue guidance for the March quarter due to work slowdowns and lower demand due to the outbreak of novel coronavirus in China.

The company said that the iPhone, which generates the bulk of Apple’s revenue, is temporarily constrained due to production ramping up more slowly than anticipated. “Work is starting to resume around the country, but we are experiencing a slower return to normal conditions than we had anticipated,” the company said in a statement Monday. In addition, demand for iPhones has been reduced because stores in China have been closed or operating with reduced hours and few customers, the company said.

Apple had forecast revenue of $63 billion to $67 billion for the fiscal second quarter ending in March. Analysts on average estimated $65.23 billion, according to data compiled by Bloomberg. The company said in January when it announced its guidance that it anticipated factories reopening beginning Feb. 10. That process however has been slow as factory workers and manufacturing partners look to contain the virus, which has resulted in about 1,800 reported deaths in China, from spreading further.

“This is the double-edged sword of being in China,” said longtime Apple analyst and Loup Ventures co-founder Gene Munster. “They’re the only big company with China exposure, so they are working through the pain of what has largely been a success for the company over the past decade.” Apple is the only major U.S. technology giant to offer the majority of its products and services in China. Products from Facebook Inc., Alphabet Inc.’s Google, Amazon.com Inc. and Netflix Inc. are either limited or unavailable.

Still, Apple isn’t the only big tech company impacted by the virus. Nintendo Co. is likely to struggle with production of its Switch gaming device due to coronavirus, while Facebook previously said that it will see production of its Oculus VR headsets drop due to the epidemic.

Apple said that, outside of China, products and services sales have been “strong to date and in line with our expectations.”

The Cupertino, California-based technology giant didn’t say what its new revenue outlook is for March but that situation is “evolving.” The company said it will share more information during its April earnings call. The disclosure marks the second time in two years that Apple has readjusted its earnings forecast due to China-related factors. For fiscal 2019, it cut holiday earnings projections on slower than expected iPhone sales in China, which it attributed in part to the trade war with the U.S.

Apple had been planning to start producing a new low-cost iPhone in February, putting it up for sale as early as March, Bloomberg News has reported. It’s unclear how coronavirus has impacted those plans.

“This unexpected news confirms the worst fears of the Street that the virus outbreak has dramatically impacted iPhone supply from China/Foxconn with a demand ripple impact worldwide,” Dan Ives, an analyst at Wedbush Securities, said in a research note. He kept an outperform rating on the stock and remains bullish on the longer-term outlook.

The company said that despite missing its guidance, all of its manufacturing sites for iPhones in the region have reopened. In addition to iPhone constraints, the company cited its inability to sell products at its retail and partner stores in China due to the virus. China represents Apple’s third-biggest market in terms of revenue and has 42 stores, which have have been closed for much of February.

“Stores that are open have been operating at reduced hours and with very low customer traffic,” Apple said in its statement. “We are gradually reopening our retail stores and will continue to do so as steadily and safely as we can.” Apple said its contact centers and corporate offices in China have already reopened. It has opened a few stores in China, including in Beijing and Shanghai, but with limited operating hours.

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Alstom to buy Bombardier rail unit for up to $6.7 billion

Rep. Garamendi: The high-speed train project is well underway

Rep. John Garamendi (D-Calif.) on how President Trump demanded that California pay back the federal government for scaling back its plan to build its $3.5 billion high-speed train project and the president’s push for a border wall.

PARIS/MONTREAL — France's Alstom has agreed to buy the rail division of Canada's Bombardier
for up to $6.7 billion to create the world's No. 2 train manufacturer and better take on Chinese
leader CRRC Corp.

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The cash and shares deal, announced on Monday, is the latest attempt by Western rail firms to try to build scale.

CALIFORNIA BULLET TRAIN COSTS JUMP BY MORE THAN $1B

Alstom, the maker of TGV bullet trains that speed between French cities such as Paris and Nice, was blocked last year from merging with Germany's Siemens by European regulators, who argued the deal could penalize consumers.

The agreement between Alstom and Bombardier would unite companies with an estimated $17 billion in combined revenues.

The French firm said the two were complementary geographically, adding Bombardier's European's footprint was stronger in northern countries and the Canadian firm would add expertise in monorail trains as well as rail services.

“We don't see it as a huge issue,'' Alstom Chief Executive Henri Poupart-Lafarge said of regulatory hurdles on a conference call. “If there are some issues, they will much easier to solve
than the one we had with Siemens."

BOMBARDIER’S SKY-HIGH RIDE

A combination with Bombardier would give Alstom a share of between 40 percent and 60 percent of the European regional train market, according to estimates cited by union sources in France, well
above Siemens at 10 percent to 20 percent. Some analysts have said there could be less opposition to a deal this time as Alstom and Bombardier have a lower combined European market share in high-speed rail and signaling.

BOMBARDIER CEO ON NEW HIGH-SPEED TRAIN

The French government, which had criticized the EU's veto on the Siemens merger, welcomed the transaction.

“This deal will allow Alstom to prepare for the future, against the backdrop of increasingly intense international competition,'' Finance Minister Bruno Le Maire said, adding he was due to discuss it with the EU's antitrust boss Margrethe Vestager on Tuesday.

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Bombardier and Alstom said they expected the deal to close in the first half of 2021.

Under the deal, one of the Bombardier rail division's shareholders, Canadian pension fund Caisse de depot et placement du Quebec, would become the lead investor in Alstom with an 18 percent
stake.

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West Midlands canals to help heat hospitals and homes under plans

The canals of the West Midlands may seem an unlikely source of warmth, but these waterways could soon be used to heat hospitals and tower blocks under a plan to harness Britain’s hidden heating sources.

The government has promised to spend more than £20m on nine schemes across the country to exploit cheap, renewable heat from canals, old mineshafts and in London tube lines.

It will spend another £70m to build some of Europe’s first plants to generate green hydrogen gas for homes and factories, including a project in Grimsby that will use the clean electricity generated by offshore wind turbines to make the low-carbon alternative gas from water.

Zero-carbon hydrogen injected into gas grid for first time in groundbreaking UK trial

Kwasi Kwarteng, the minister for business, energy and clean growth, said cleaning up emissions from industry and housing was a big challenge, and an important part of “eliminating our contribution to climate change by 2050 while also growing our economy”.

The government’s hunt for alternative renewable sources of heat has gained pace after ministers pledged to ban gas-fired boilers from newbuild homes from 2025. Officials estimate that the latest funding could provide a local renewable energy resource to 250,000 people by 2030, which would cut their energy bills by half while helping the UK to meet its climate targets.

Birmingham’s canals have been picked to play a role in the UK’s green heating revolution by the same team behind a scheme that uses “waste heat” from the Northern line of the underground to warm hundreds of homes in Islington, north London.

The consortium, led by London South Bank University and known as GreenSCIES, plans to use the government funding to grow its Islington project and install water source heat pumps in the canal, which runs through Sandwell near Birmingham.

The heat pumps work like a refrigerator in reverse, using a coolant gas to transfer heat from the water to be piped into a council tower block of 1,200 residents, many of whom are fuel poor. An extension of the project could be used to warm Birmingham City hospital.

Heat pumps will also be used at another government-backed project in Rugeley, north of Birmingham, where a defunct coal-fired power plant is to be turned into a sustainable village of 2,300 homes, warmed by local canals and geothermal heat from disused mineshaft.

Once at full scale, the Islington project will provide heat to an estimated 33,000 residents and nearly 70 local businesses. It will also help to reduce carbon emissions by an estimated 80% compared with traditional gas-fuelled heating systems while also addressing fuel poverty.

Government officials also plan to throw their support behind two schemes, on the banks of the Mersey and near Aberdeen, to produce low-carbon hydrogen by splitting traditional heating gas and capturing the carbon dioxide that is released before it can contribute to global heating.

Hydrogen was injected directly into the UK gas grid for the first time this year. A 20% blend of hydrogen in the national gas grid could reduce carbon dioxide emissions by about 6m tonnes a year – the equivalent of taking 2.5m cars off the road.

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Japan’s economy heading for recession, and Germany wobbles

Japan’s economy is heading for a recession this year after figures showed the world’s third largest economy slumped by an annual rate of 6.3% during the last quarter of 2019.

Germany, the world’s fourth largest economy, is also expected to stumble as the coronavirus epidemic and a slump in trade with China combine with weak consumer demand to drag growth lower.

The German central bank, the Bundesbank, said on Monday the country’s major industrial sectors – from cars to chemicals – were continuing to see a fall in orders “albeit with a decrease in intensity”.

“However, economic risks exist with regard to the coronavirus outbreak in the People’s Republic of China,” the bank’s latest report said.

With two of the largest exporting nations signalling that they are in trouble, economists have begun to rewrite their forecasts for growth for the global economy in 2020.

Germany, say Moody’s analysts, will cling to a 1% growth rate this year and Japan will recover, but only slightly, to register a 0.3% growth rate.

However, the plunge in Japan’s output at the end of 2019, which amounted to 1.6% quarter on quarter, is expected to drag down growth in the current quarter and possibly the next. A technical recession is defined as two consecutive quarters of falling output.

Moody’s, the credit ratings agency, said the impact of the coronavirus on China and Japan’s economy would be widely felt, and not just in major trading partners such as Germany.

The euro area more broadly is expected to grow by 1.2% in 2020, only modestly better than the 1.1% growth rate registered in 2019. Meanwhile the UK will outpace only Italy and Japan among the major economies, after Moody’s held its projections of Britain’s GDP growth for this year and 2021 at 1%.

The firm also reduced its growth forecast for China to 5.2% in 2020 and maintained its expectation of 5.7% growth in 2021, down from 6% last year, which was the lowest for 30 years.

Phillippe Waechter, chief economist at Ostrom Asset Management, said the timing of a VAT increase in Japan had had an unfortunate impact on growth after 18 months of battles between China and the US over trade tariffs.

Japan’s economy minister, Yasutoshi Nishimura, said the government was ready to take all necessary steps and was watching the impact the coronavirus outbreak could have on the economy and specifically tourism.

The Japanese economy should also get a boost from the Tokyo Olympic Games later this year.

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Cruise Travel Risks Remain ‘Manageable’ Despite Virus, WHO Says

In this article

Cruise ship travel remains a “manageable risk” for now, and it doesn’t make sense to recommend a ban on it, the World Health Organization said, even as the return home of 3,000 travelers from two coronavirus-stricken cruise ships fuels fears of further contagion.

“People say we should steer clear of cruise ships, or steer clear of airports or steer clear of certain ethnic groups,” Mike Ryan, executive director of the WHO’s Health Emergencies Program, said at a press briefing Monday at the organization’s Geneva headquarters. “We have to be really careful” of such suggestions. “We need an approach to managing risk that allows us to continue to operate as a society.”

The number of reported cases of coronavirus from two Carnival Corp. cruise ships, the Westerdam and the Diamond Princess, continues to raise questions about the effectiveness of containing the virus in such environments. Japanese authorities earlier Monday said 99 more people from the Diamond Princess tested positive for coronavirus.

The vast majority of cases in the virus outbreak are in China, and people shouldn’t rush to judgment, Ryan said.

“If we’re going to disrupt every cruise ship in the world on the off chance that there might be some potential contact with some potential pathogen, then where do we stop?” he said.

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NRIs major gainers from govt’s move to remove DDT

The rationale for the proposed amendment is that since foreign investors were unable to avail of credit on DDT in their home countries, it reduced the rate of return they were able to earn on equity capital, point out Homi Mistry and Reena Poddar.

Illustration: Dominic Xavier/Rediff.com

One of the major changes proposed by finance minister Nirmala Sitharaman in her second Union Budget relates to the taxation of dividends.

The Budget has proposed to abolish the Dividend Distribution Tax (DDT), and moving to the classical system of taxing dividend in the hands of individuals.

Current situation

Currently, a domestic company is required to pay DDT at the rate of 15 per cent (plus applicable surcharge and health and education cess) on the dividends.

Further, dividend income from a domestic company is tax-free up to Rs 10 lakh.

Dividend in excess of Rs 10 lakh is taxed at the rate of 10 per cent in the hands of specified resident individual shareholders.

It is also tax-free for non-resident individual shareholders.

Similarly, mutual funds are also liable to pay tax at the specified rate on the income distributed to unit holders.

Such dividend is exempt from tax in the hands of unit holders.

The proposal

The Finance Bill of 2020 now proposes to tax dividend income in the hands of the shareholder and unit-holder respectively.

Domestic companies or mutual funds will no longer be required to pay DDT, but will be required to withhold taxes at specified rates.

The rationale for the proposed amendment is that since foreign investors were unable to avail of credit on DDT in their home countries, it reduced the rate of return they were able to earn on equity capital.

To increase the attractiveness of the Indian equity market and to provide relief to a large class of investors, the government has proposed to do away with DDT.

With the advent of technology and easy tracking systems, the government has proposed to shift to the system of taxing dividend in the hands of shareholders or unit holders.

Dividend income arising from securities held as investment will be taxed and reported as income from other sources in the income-tax return form.

Deduction of only interest expense incurred to earn that dividend income, to the extent of 20 per cent, of total dividend income can be claimed.

Further, the final dividend will be taxable in the year in which it is declared, distributed or paid by the company, whichever is earlier.

However, interim dividend will be taxable in the year in which the amount of such dividend is unconditionally made available to the shareholder.

In case of mutual fund units with dividend reinvestment option, dividends are not received as cash.

Instead, the dividends are directly reinvested in the units.

In such a scenario, even if the re-invested dividend is not received in cash, it will be taxed.

This may create cash flow challenges.

Further, even when dividend is unclaimed due to any reason, it will have to be offered to tax.

Tax rates

For resident individuals, the dividend income shall be chargeable to tax at their respective tax rate.

However, dividend shall be taxable at a concessional tax rate of 10 per cent without providing for any deduction, if the resident individual is an employee of an Indian company or its subsidiary engaged in specified industries (like information technology, entertainment, pharmaceutical or bio-technology) and receives dividend from Global Depository Receipts (GDRs) issued by such a company under a specified Employees’ Stock Option Scheme, which are purchased by the employee in foreign currency as notified.

The dividend income, in the hands of a non-resident individual, will be taxable at the rate of 20 per cent without providing for deduction.

However, where the dividend is received from GDRs of an Indian company or a public sector company purchased in foreign currency, the tax shall be charged at the rate of 10 per cent without providing for any deductions.

Non-residents can avail of DTAA

India has signed Double Tax Avoidance Agreements (tax treaties) with many countries to help taxpayers avoid paying double taxes on the same income.

Lower rate of withholding tax can be availed under the tax treaties for non-resident individual investors.

Such lower rate will be subject to satisfying conditions related to treaty eligibility.

The balance tax payable (net of withholding), if any, on dividend by individuals, can be deposited into the government treasury in the prescribed manner via advance tax or self-assessment tax within the specified due dates.

The Budget measures still must be approved by both Houses of Parliament and receive the assent of the President of India.

Once approved, the provisions will apply from the India tax year 2020-2021 (April 1, 2020, to March 31, 2021), unless otherwise stated.

Plan your cash flows

After the abolition of DDT and with the introduction of a tax on dividend, the post-tax net return on investment for non-resident individuals may increase (due to availability of credit for tax on dividend in their home country).

However, the tax outgo on dividend by resident individuals may increase, especially for high-income earners.

Further, individual investors need to be vigilant in tracking dividend re-invested and plan their cash flow as there may be a tax outgo, even if there is no cash inflow.

  • MONEY TIPS

Homi Mistry is partner and Reena Poddar is manager, Deloitte Haskins and Sells LLP.

Understanding finance doesn’t come naturally to you?

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U.S. Stocks Show Notable Rebound After Initial Drop

After initially moving to the downside, stocks have shown a notable rebound over the course of morning trading on Monday. The major averages have bounced well off their lows of the session and into positive territory.

In recent trading, the major averages have pulled back off their best levels, but they are holding on to moderate gains. The Dow is up 79.15 points or 0.3 percent at 29,181.66, the Nasdaq is up 44.85 points or 0.5 percent at 9,565.36 and the S&P 500 is up 10.73 points or 0.3 percent at 3,338.44.

The initial weakness on Wall Street reflected lingering concerns about the economic impact of the deadly coronavirus outbreak.

The Chinese government revealed Sunday night that a total of 40,171 cases of coronavirus have been confirmed, with 908 people dying from the disease.

World Health Organization Director-General Tedros Adhanom Ghebreyesus also voiced concerns about the virus being spread from people with no travel history to China, saying, “We may only be seeing the tip of the iceberg.”

However, traders seem reassured by Chinese President Xi Jinping’s pledge to win the fight against the outbreak, with the Chinese leader saying the country will speed up the development of drugs aimed at treating the deadly pneumonia-like virus.

Overall trading activity has also remained somewhat subdued as some traders stick to the sidelines ahead of the release of closely watched reports on consumer prices, retail sales and industrial production later this week.

Federal Reserve Chairman Jerome Powell is also due to head up to Capitol Hill in the coming days for his semi-annual testimony to Congress.

Powell is slated to testify before the House Financial Services Committee on Tuesday and the Senate Banking committee on Wednesday.

Gold stocks have shown a strong move to the upside in morning trading, driving the NYSE Arca Gold Bugs Index up by 1.5 percent.

The strength in the gold sector comes amid an increase by the price of the precious metal, with gold for April delivery rising $3.80 to $1,577.20 an ounce.

Tobacco and retail stocks are also seeing notable strength on the day, while oil service stocks are moving lower along with the price of crude oil.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Monday. Japan’s Nikkei 225 Index and Hong Kong’s Hang Seng Index both ended the day down by 0.6 percent.

The major European markets have also moved to the downside on the day. While the U.K.’s FTSE 100 Index has slid by 0.4 percent, the German DAX Index and the French CAC 40 Index are both down by 0.3 percent.

In the bond market, treasuries are extending the notable upward move seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2 basis points at 1.558 percent.

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