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Happy Friday, everyone. The trading week is ending with a thud. For the second consecutive day, red is dominating the screens.
What’s moving markets? Coronavirus, containment concerns, and the coming—gulp—market correction.
Again today the Asian and European markets are down, as are the U.S. futures. So much for that bad-one-day, good-the next “W” trading cycle we’d been seeing.
It’s all about the virus. We’ve reached a new phase in the coronavirus outbreak as contagions flare outside China—the worrying flash-points today are in Japan, South Korea and Australia. Overall, infections have now topped 76,000. What it all means is that hopes of containment are fading. Fast.
Hong Kong’s Hang Seng sank the most on the jitters, down more than 1% on Friday. Brent crude is down even further, and the Dow and S&P 500 appear set to extend yesterday’s losses even further.
As we do every Friday, let’s now take a look at the big numbers of the week.
By the numbers
$1,636.20. That’s the price of gold per troy ounce, a seven-year high. The shiny yellow stuff is up nearly 1% today, and up 7.4% year-to-date. Whenever you see a run on gold like this it almost always means uncertainty in the markets is sky-high. Earlier, I pointed out that tech stocks were actually outperforming gold. But the two are now beginning to trend in opposite directions.
10%. Bulls, you’re not going to like this next data point. Goldman Sachs’ Peter Oppenheimer has warned investors in a note that a stock market correction “is looking more probable.” He believes investors are underestimating the coronavirus impact on corporate earnings. If his analysis is correct, that means a 10% drop from the markets peak. What would that look like? Let’s take the S&P 500. A correction would take the index back down to just above 3,000, or a 340-point drop. The Dow Jones Industrial Average, meanwhile, would drop to about 26,600. On the bright side, he notes, it’s merely a correction, not that we’re nearing bear territory (a 20% drop).
19.78. Since Apple dropped its bombshell sales warning on Monday, the Nasdaq has had a choppy ride. Based on Thursday’s close, it’s up a sliver this week, by 19.78 points. Don’t get too complacent. That meager gain could easily get wiped out at the opening bell today. As noted above, investors have not yet fully taken into account the full coronavirus impact on earnings in coming quarters. It’s not as if companies are hiding the news. Here’s a short-list of the companies (beyond Apple) that have issued coronavirus warnings this week: Procter & Gamble, Alibaba, Adidas, Puma, Foxconn, Qantas, Air France-KLM and Moller-Maersk, the world’s biggest shipping company. They join luxury brands, energy stocks, etc., etc.
To end on a positive note—it’s Friday. Have a nice weekend, everyone.
I’ll see you back here on Monday.