Asian stocks looked poised for a cautious start to the week as investors mulled China’s latestplans to help its economy counter the impact of the coronavirus outbreak. U.S. equity futures ticked higher.
Futures edged lower in Japan and Hong Kong, while Australian shares opened flat after two weeks of gains for global equities. Volumes may be lower than average Monday due to a U.S. holiday; Treasuries won’t trade. China over the weekend unveiled plans for reducing corporate taxes and fees, and letting banks run up more non-performing loans. The head of a hospital in Wuhan, the city at the center of the outbreak, said a turning point has been reached and that new infections are declining, CCTV reported.
While investor sentiment improved the past two weeks amid optimism the outbreak may be nearing a peak, new cases outside of China are keeping traders on edge. The head of the International Monetary Fund praised China for its “very aggressive” measures to limit the impact of the disease. Hubei province on Monday reported almost 2,000 new cases and 100 additional deaths.
“News on the Covid-19 outbreak will no doubt continue to dominate over the week ahead as investors attempt to assess whether it is being contained or not,” said Shane Oliver, head of investment strategy at AMP Capital Investors Ltd. “Improving global growth and still easy monetary conditions should drive reasonable investment returns through 2020, providing the coronavirus is contained in the next month or so.”
Meantime, U.S. equities on Friday eked out gains as data showed retail sales rose for a fourth straight month, underscoring steady consumer spending. Treasuries ended the week with the 10-year yield at 1.58%. American equity and bond markets are closed Monday.
Here are some key events coming up:
Japan’s economy probably took a hit in the fourth quarter from the sales tax hike and disruptions by typhoons. Consensus is for GDP to contract 3.8% on an annualized quarterly basis, compared with a 1.8% gain in the prior period. That’s due Monday.
- Earnings season rolls on with results from companies including: BHP Group, Glencore Plc, HSBC Holdings Plc, Walmart Inc. and Deere & Co.
- U.S. celebrates Presidents’ Day on Monday, with financial markets shut.
- Minutes of the most recent Federal Reserve meeting are published on Wednesday.
- Indonesia is expected to cut interest rates on Thursday, following emerging-market peers from Brazil to South Africa which have lowered borrowing costs already this year.
These are the main moves in markets:
- Futures on the S&P 500 added 0.2% as of 8:05 a.m. in Tokyo. The index rose 0.2% on Friday.
- Futures on Japan’s Nikkei 225 dipped 0.3%.
- Hang Seng futures slid 0.6%.
- Australia’s S&P/ASX 200 Index rose 0.1%.
- The yen was flat at 109.81 per dollar.
- The offshore yuan was little changed at 6.9897 per dollar.
- The Australian dollar rose 0.1% to 67.20 U.S. cents.
- The euro bought $1.0838, up 0.1%.
- The yield on 10-year Treasuries slid three basis points to 1.58% on Friday.
- Australia’s 10-year yield rose about one basis point to 1.06%.
- West Texas Intermediate crude rose 0.2% to $52.15 a barrel.
- Gold slipped 0.2% to $1,581.30 an ounce.
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