Weekly Market Update: Coronavirus concerns persist but investors climb wall of worry
Fri, 14 Feb 04:03 PM EST/09:03 PM GMT
- US stock markets managed to notch new all-time highs this week despite continued hand-wringing around the coronavirus. Data coming out of China remained sketchy at best. Wednesday saw Hubei disclose a spike in new cases of more than 14K after the Province changed the methodology by which they clinically diagnosed cases. The very next day, Chinese officials attempted to walk those numbers back, but with outside officials still not being let into the country to do their own investigations, uneasiness persisted. Investors for the most part continued to look past the headlines as well as cautious corporate commentary related to the virus. Aiding sentiment was continued speculation that the Chinese government, as well as the PBOC, continue to stand ready to provide ample stimulus. - US treasury yields moved lower and the curve flattened as the week progressed. US supply was well received as the lower yields had little effect on investor demand in all three coupon auctions. Undercurrents of risk-off flows related to the coronavirus likely buoyed demand along with softer economic data. European growth readings remained very subdued. Tuesday’s US JOLTS report was the weakest since early 2017 and Friday saw the US retail sales input to GDP miss expectations by a fairly wide margin. WTI crude attempted what appeared as a modest technical bounce after holding the $50 level for the largest weekly rally since early December. Gold prices drifted up, particularly late in the week, as rates came down and traders looked to hedge risk positions heading into the long holiday weekend. For the week, the S&P gained 1.6%, the Dow added 1% and the NASDAQ closed at another all-time high up 2.2%. - In corporate news this week, Nvidia rallied after posting a strong quarter and guiding well above consensus amid strength in the gaming sector. Akamai stock lifted after topping estimates on revenue and profit and guiding ahead of consensus, noting rapid growth in its cloud security business and robust seasonal traffic on its network. Under Armour guided FY20 sales down mid-single-digits as it sees coronavirus headwinds and said it would take further restructuring charges. QSR beat on its top and bottom line, helped by a surge in Popeye’s sales, though it noted Burger King has closed about half of its 1,300 China stores due to the coronavirus outbreak. Sprint shares surged after a judge rejected state AGs' arguments and signed off on its T-Mobile deal. Simon Property Group announced it would buy Taubman Centers for $52.50/shr in a $3.6B cash deal designed to boost Simon’s funds from operations as mall operators remain under pressure. A judge granted Amazon’s request to temporarily halt Microsoft's $10B JEDI cloud contract with DOD. Tesla surprised the market by announcing it would raise $2.6B in a discounted stock offering to bolster its balance sheet.
MONDAY 2/10 TCO To be acquired by Simon Property Group for $52.50/shr in cash valued at ~$3.6B (US) Reportedly the White House is considering drug price indexing as a way to reduce drug prices - press
TUESDAY 2/11 S Judge concludes T-Mobile/Sprint merger is not reasonably likely to substantially lessen competition; rejects state AGs' arguments *(US) DEC JOLTS JOB OPENINGS: 6.423M V 6.925ME (lowest since Dec 2017)
WEDNESDAY 2/12 HEIA.NL Reports FY19 Net €2.56B v €2.05B y/y Op €3.63B v €3.12B y/y, Rev €28.4B v €22.5B y/y *(SE) SWEDEN CENTRAL BANK (RIKSBANK) LEAVES REPO RATE UNCHANGED AT 0.00%; AS EXPECTED; maintains forward guidance (US) Association of American Railroads weekly rail traffic report for week ending Feb 8th: 485.3K, -6.6% y/y AMAT Reports Q1 $0.98 v $0.92e, Rev $4.16B v $4.12Be (CN) China Hubei Coronavirus update Feb 12th: 14,840 additional cases (under revised standards) v 1,638 prior; Daily death toll 242 v 94 prior; notes it has adopted a revised methodology under which additional confirmed cases now include cases that are 'clinically diagnosed'
THURSDAY 2/13 AIR.FR Reports Q4 Net -€3.5B v +€1.6B y/y, Adj EBIT €2.81B v €2.7Be, Rev €24.3B v €23.3Be TKA.DE Reports Q1 Net -€372M v -€85Me, Adj EBIT €48.8M v €59Me, Rev €9.67B v €9.67Be CSGN.CH Reports Q4 (CHF) Net 852M v 934Me, Pretax 1.21B v 1.38Be, Rev 6.19B v 5.56Be (DE) Germany Jan Final CPI M/M: -0.6% v -0.6%e; Y/Y: 1.7% v 1.7%e (EU) EU Commission Winter Forecasts: Economy is well placed to navigate external risks but economic malaise is set to continue this year *(UK) CHANCELLOR OF THE EXCHEQUER JAVID (Fin Min) RESIGNS in protest of PM demand to fire all 5 of his aides - financial press HSBA.UK Said to be considering creation of a bad bank as part of its strategic review - financial press KHC Reports Q4 $0.72 v $0.68e, Rev $6.54B v $6.58Be; Turnaround will take time; Expect significant progress in 2020 *(US) JAN CPI M/M: 0.1% V 0.2%E; CPI (EX-FOOD/ENERGY) M/M: 0.2% V 0.2%E; CPI NSA: 257.971 V 257.863E *(US) TREASURY $19B 30-YEAR BOND AUCTION DRAWS 2.061%; BID TO COVER 2.43 V 2.23 PRIOR AND 2.24 OVER LAST 4 AUCTIONS (RECORD LOW AUCTION YIELD) (US) Fed reduces size of overnight repo operations and plans smaller term operations (US) Senators reportedly expect Fed nominee Shelton to withdraw from consideration - The Hill NVDA Reports Q4 $1.89 v $1.66e, Rev $3.11B v $2.96Be
FRIDAY 2/14 AZN.UK Reports Q4 Core EPS $0.89 v $0.98e, Rev $6.66B v $6.73Be *(DE) GERMANY Q4 PRELIMINARY GDP Q/Q: 0.0% V 0.1%E; Y/Y: 0.4% V 0.3%E *(US) JAN RETAIL SALES ADVANCE M/M: 0.3% V 0.3%E; RETAIL SALES (EX-AUTO) M/M: 0.3% V 0.3%E *(US) JAN INDUSTRIAL PRODUCTION M/M: -0.3% V -0.2%E; CAPACITY UTILIZATION: 76.8% V 76.8%E *(EU) EURO ZONE Q4 PRELIMINARY GDP Q/Q: 0.1% V 0.1%E; Y/Y: 0.9% V 1.0%E (US) U.S. states reportedly reject opioid settlement agreement from wholesalers - WSJ