|Day's Range||3,322.12 - 3,341.42|
|52 Week Range||2,703.79 - 3,347.96|
(Bloomberg) -- Stocks pared early losses in Asian trading Monday as investors continued trying to gauge when economic activity might rebound after the hit from the coronavirus.Benchmarks in Hong Kong and Seoul fell more than 1% early on, with losses in Shanghai and Tokyo slightly less, and U.S. futures dropped 0.7%. Those moves faded after a report that Apple Inc.’s main manufacturer got a green light to resume some production. The Australian dollar climbed and the yuan rose past 7 per dollar offshore. Treasuries are flat, while oil trades around $50 a barrel in New York.With cases outside of China continuing to increase, investors will be monitoring whether the rate of change kicks up a gear. Meantime, monetary authorities across emerging markets have stepped in. The People’s Bank of China moved to keep liquidity ample Monday through reverse-repurchase agreements.“This coronavirus seems to be going on for longer, is infecting more people and the hit to growth will be longer,” Diana Mousina, an economist at AMP Capital Investors Ltd., told Bloomberg TV in Sydney. “You won’t be able to recoup all of the negative impacts in the first quarter.”Here are some key events coming up:Earnings season continues with reports including: Alibaba, Softbank, Nissan, Airbus, Nestle and AIG.Federal Reserve Chairman Jerome Powell delivers his semiannual testimony in Congress on Tuesday and Wednesday.Thursday brings a gauge of underlying U.S. inflation, the core consumer price index. It’s expected to increase to 0.2% in January, a faster pace than in December.China and the U.S. on Friday lower tariffs on billions of dollars of respective imports, as part of the trade deal signed last month.And these are the main moves in markets:StocksJapan’s Topix index dropped 0.4%. as of 11:25 a.m. in Tokyo.The Shanghai Composite Index was up 0.2%Hong Kong’s Hang Seng Index declined 0.5%.Futures on the S&P 500 were up 0.1%. The underlying gauge fell 0.5% on Friday.South Korea’s Kospi index retreated 0.7%.Australia’s S&P/ASX 200 Index slid 0.2%.CurrenciesThe yen was little changed at 109.85 per dollar.The offshore yuan ticked up 0.1% to 6.9988 per dollar.The euro bought $1.0953, little changed.The Australian dollar gained 0.4% to 67.01 U.S. cents.BondsThe yield on 10-year Treasuries was steady at 1.59%.Australia’s 10-year yield declined two basis points to 1.02%.CommoditiesWest Texas Intermediate crude oil fell 0.2% to $50.21 a barrel.Gold was little changed at $1,570.32 an ounce.\--With assistance from Sydney Maki.To contact the reporter on this story: Adam Haigh in Sydney at firstname.lastname@example.orgTo contact the editors responsible for this story: Christopher Anstey at email@example.com, Joanna OssingerFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.?2020 Bloomberg L.P.
Stocks and oil fell while safe-haven gold rose on Monday as the death toll from a coronavirus outbreak surpassed the SARS epidemic, raising alarm bells about its severity. As many as 908 people have so far died in China's central Hubei province as of Sunday with most of the new deaths in the provincial capital of Wuhan, the epicentre of the outbreak. MSCI's broadest index of Asia-Pacific shares outside Japan stumbled 0.7% to be on track for its second straight day of loss.
(Bloomberg) -- It’s an old theory, with shaky proof, that always gets louder right around now. The stock market is so overrun with dumb index money and exchange-traded funds that it can’t even tell when something bad’s happening.You hear it from old hands and stock pickers, lamenting a lost edge in a world where even a pandemic barely registers on charts. Something sinister must be afoot when 30,000 people are infected with coronavirus, the global economic expansion is threatened, and the S&P 500 has its best week in eight months.“The passive flows are set on a schedule the way they come in. They create this underlying bid to the tape that is just there,” said Michael O’Rourke, JonesTrading’s chief market strategist. “They don’t care if they buy the market at 10-times earnings, 20-times earnings, 30-times earnings, 50-times earnings.”Click here for a Bloomberg Odd Lots Podcast on passive distortions.Heed it all at your own risk. Such tales are spun anytime the market shakes off bad news (and even when it doesn’t.) Whatever happens in markets, someone will say it’s bad, and someone will blame ETFs. There are, of course, any number of reasonable explanations for the market’s buoyancy that have nothing to do with zombification -- Federal Reserve policy, the resurgent manufacturing sector, solid earnings.That said, it’s easy to see why index products so often turn up as culprits in these types of market narratives: their relentless march really does provoke terror in one set of investors, mutual-fund stock pickers. Already in 2020, that group has fallen behind its passive brethren by a distance that will be hard to make up.“A lot of times when you see criticisms of the growth in passive investing, it’s coming from an active manager,” said David Perlman, head of ETF research at UBS Wealth Management. “To the extent that we continue to see active funds struggle performance-wise, I think that shift to passive will continue.”For anyone whose fund makeup strays too far from the S&P 500, it’s been a brutal month. With only 37% of managers beating benchmarks in January, the group just suffered one of the worst starts to any year going back two decades, Bank of America Corp. data show.Index funds remain the undisputed heavyweight champions of stocks in 2020, the best place to be amid a rally that has defied everything from virus panic to Middle East tumult. Through all the concerns, the S&P 500 never fell much more than 3%, and now sits just below a record.The question of whether ETFs zombify the market, or in academic terms “contribute to the comovement of assets,” is a heavily researched topic in financial economics, with very little consensus on an answer. An August 2018 study by Federal Reserve staffers listed the verdict as “unclear” and evidence “mixed” as to whether inclusion in indexes was likely to raise a stock’s beta, a measure of systemic risk.Realize, when comovement is studied, it’s usually not to see if the market has gotten less prone to shocks, but more. Indeed, any willingness passive investors have to sit tight during volatile periods is billed by the index industry as a good thing, evidence of maturity. Fund shops fell over themselves following the equity sell-off in late 2018 describing their clients’ steadfastness.Either way, macroeconomic concerns have strengthened correlations between S&P 500 stocks at the fastest pace since the 2018 rout nearly ended the bull market. That companies are moving together in the middle of an earnings season, a time when stock pickers theoretically gain an edge, is even more disconcerting for those that have lagged behind.“The trend is clearly moving toward passive, unless active management begins to show signs of picking up,” said Mark Heppenstall, chief investment officer at Penn Mutual Asset Management, which oversees $28 billion. “This isn’t going to help matters.”Active managers aren’t doing themselves any favors with their picks. Perhaps sensing a turn was due, they came into the year with relatively light exposure to the high-flying technology firms that have ruled the bull market.That was a poor decision. Five companies alone have accounted for 55% of the S&P 500’s returns year-to-date -- Microsoft Corp., Apple Inc., Amazon.com Inc., Alphabet Inc., and Intel Corp. That’s come at the expense of stock pickers who had been waiting for their demise, with all except Google parent Alphabet making a list of mutual fund’s most unloved companies.Doubling the pain is that while active managers’ most hated stocks have outperformed, their highest conviction calls have lagged. A Goldman Sachs basket of mutual fund’s most overweight positions has trailed the S&P 500 in five of the last six months, and a ratio of relative price appreciation versus their underweight peers fell to the lowest level since 2017.“There is a lot of scrambling to get into the names that have been leadership names, which many active investors had shunned,” said Liz Ann Sonders, chief investment strategist at Charles Schwab. “Professional managers are constantly under performance pressure on a monthly basis, on a quarterly basis. When you have such a straight shot up when momentum is as powerful as this, absolutely it raises the pressure.”So what, then, are active managers to do when they’re already behind for the year? Chris Harvey, the head of equity strategy at Wells Fargo Securities, says go big or go home. By his measures, active managers remain positioned for the likes of Microsoft, Intel and Apple to underperform, and their track record picking stocks within the technology sector has been fickle despite the hours spent researching.“The question for these PMs is: Are you confident the M.I.A. stocks will underperform in 2020? If so, then now is the time to materially increase these under-weightings,” Harvey wrote to clients this week. “If not, we advise benchmark weighting the names, forgetting what happened in 2019, and focusing attention elsewhere.”\--With assistance from Claire Ballentine and Vildana Hajric.To contact the reporter on this story: Sarah Ponczek in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Jeremy Herron at email@example.com, Chris NagiFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.?2020 Bloomberg L.P.
China’s deadly coronavirus outbreak continues to threaten multi-national companies, as a range of businesses from leisure to retail suffer from the outbreak’s after-effects.
(Bloomberg) -- History’s longest bull market was built on easy Federal Reserve policy, strong corporate earnings and an uncanny willingness among investors to shake off bad news. So it has been for 11 years, so it is now.After spiraling dread around China’s virus outbreak punished stocks at the end of January, the S&P 500 bounced back with its best weekly advance in eight months, rising 3.2% and closing Thursday at a record. Signs of a resurgent factory sector combined with forecasts for profit growth and interest rates hovering close to the lowest in four years to revive sentiment.The rally pushed the S&P 500’s return since bottoming in March 2009 to almost 520%, including dividends, good for an annualized gain of 18.1%. More than $25 trillion in stock market value has been created, including $7.5 trillion in 2019, by far the most ever.“This is going to be a week that at the end of 2020 we’re going to look back and say ‘Wow, now that was a news week,”’ Kim Forrest, chief investment officer at Bokeh Capital Partners, said by phone. “Markets more or less shrugged it off and found whatever bits of good there were. The markets shrugged off all of the concerns.”The resilience was on full display in the first four days of the week, when stocks surged 3.7% on speculation the economic fallout from the spreading virus would be minimal. The sentiment somewhat soured on Friday, with investors pulling back from risk assets after reports of further infections and more quarantines, at the same time a growing number of companies warned the virus will hit their bottom lines.The benchmark still hit a new all-time high for the first time in 11 sessions as corporate profits topped estimates and data showed the American labor market remained robust. China poured stimulus into its economy and cut import tariffs, adding to evidence that central banks stand ready with support if needed.The Dow Jones Industrial Average gained 4.2% and the Nasdaq 100 5.1% in the five days. The Cboe Volatility Index lost 18% to end the week at 15.48.“The tariff news was a little bit of a surprise, just how quickly that concession came about,” said Liz Ann Sonders, chief investment strategist at Charles Schwab. “You even saw a bit of an uptick in expectations in the futures market for a Fed rate cut here, too. That’s all you need in this momentum-driven market, the prospect for a little more central bank stimulus.”To contact the reporters on this story: Elena Popina in Hong Kong at firstname.lastname@example.org;Vildana Hajric in New York at email@example.comTo contact the editor responsible for this story: Brad Olesen at firstname.lastname@example.orgFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.?2020 Bloomberg L.P.
A growing older-age working class population could be one factor keeping wage growth from accelerating further, according to at least one economist.
(Bloomberg) -- U.S. equities limped into the weekend as renewed concern the coronavirus will slow global growth overshadowed fresh signs of a strong labor market. Treasuries jumped.The S&P 500 Index halted a four-day rally, but still notched its best week since June. The latest jobs report showed hiring stayed robust last month, bolstering optimism growth can persist. But stocks remained lower after reports of further infections, an increase in deaths and more quarantines.The Federal Reserve warned the outbreak posed a “new risk” to the economy. The fallout for companies is starting to come into focus, with corporations such as Toyota Motor Corp. and Honda Motor Co. temporarily halting operations in China. Apple Inc.’s iPhone maker Foxconn told employees not to return to work when China’s extended break ends Monday.The 10-year Treasury yield slumped below 1.6% and crude lost its grip on $51 a barrel.“The market moved up so quickly over the last few days and I think papered over the continued risk associated with the coronavirus,” said Robin Anderson, senior global economist at Principal Global Investors. “There’s still a lot of unknowns out there.”Australia’s dollar dropped to its lowest level in a decade with the fallout from the coronavirus hurting riskier assets. Equities pushed lower across most of Asia as news of further infections on a cruise ship off Japan offered another reminder that cases remain on the rise. Singapore boosted its disease response to the second-highest level, the same one for the SARS epidemic. Confirmed cases worldwide now total 31,432, having risen more than 3,000 in one day, while the death toll reached 638.Meanwhile, the presidents of China and the U.S. reaffirmed their commitment to the implementation of a phase-one trade deal in a phone call Friday.And these are the main moves in markets:StocksThe S&P 500 Index decreased 0.5% as of 4 p.m. New York time.The Nasdaq 100 fell 0.5%.The Stoxx Europe 600 Index declined 0.3%.The MSCI AC Asia Pacific Index fell 0.7%.CurrenciesThe Bloomberg Dollar Spot Index gained 0.2%.The British pound fell 0.3% to $1.2896.The euro fell 0.3% to $1.0946.The Japanese yen strengthened 0.2% to 109.77 per dollar.BondsThe yield on 10-year Treasuries fell seven basis points to 1.57%.The two-year rate dropped to 1.4%Britain’s 10-year yield fell one basis point to 0.57%.Germany’s 10-year yield dipped two basis points to -0.39%.CommoditiesWest Texas Intermediate crude fell 1% to $50.42 a barrel.Gold futures added 0.3% to $1,574.20 an ounce.Copper fell 1.7% to $2.55 a pound.\--With assistance from Adam Haigh, Cormac Mullen, Constantine Courcoulas and Todd White.To contact the reporters on this story: Claire Ballentine in New York at email@example.com;Vildana Hajric in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Sam Potter at email@example.com, ;Jeremy Herron at firstname.lastname@example.org, Brendan WalshFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.?2020 Bloomberg L.P.
Based on the late session price action, there may be enough downside momentum in the market to drive the March E-mini S&P; 500 Index into the uptrending Gann angle at 3292.75. Look for buyers on the first test of this angle.
Stock markets pulled back slightly during the day on Friday after the jobs report came out, although probably not as a reaction to the jobs report as it was essentially decent. Profit-taking is probably the best way to put it.
Stock markets had a great week as they had reached towards the all-time highs again, but to pull back slightly on Friday and what probably would have been a bit of profit-taking.
With the US markets rallying to fresh record highs this week, it certainly seems like a good time to buy dips in the market. The challenge, however, is finding stocks that don’t have a significant amount of downside risk.
It was another good day for global equities, which saw the S&P500; up 0.2% to notch a fresh record high.
When worries over the coronavirus shook U.S. stocks out of a period of quiet trading last week, investors wondered if the outbreak was the “Black Swan” event that would trigger a sharp decline. The sharp snapback has revived concerns among some investors that market participants are growing overly confident that easy money policies from central banks will underpin prices, despite serious risks to global growth from the coronavirus. Two deaths have been reported outside mainland China, in Hong Kong and the Philippines, prompting countries to quarantine hundreds of people and cut travel links with China.
In my opinion, U.S. investors were trading momentum and not value. This usually indicates the presence of short-term speculative buyers, not value-seeking investors. I also think that some money managers bought because everyone was buying and they didn’t want to miss the move.
Global equity markets and government debt yields slumped on Friday as nagging concerns about the impact of the coronavirus on global growth overshadowed a strong U.S. jobs report that indicated an economy on pace to grow moderately. Stocks on Wall Street retreated from record highs and safe-havens gold and the Japanese yen rose as investors weighed how much the virus is likely to disrupt supply chains. "Investors should be watching the effect of the coronavirus on the global supply chain and thus, on the global economy and corporate profits," said John Vail, chief global strategist at Nikko Asset Management.