By Lorcan Roche Kelly
Deaths from the coronavirus passed 2,000 with the number of confirmed cases globally rising to about 75,000. While the rate of increase seems to be slowing, there are warnings of the possibility of fresh outbreaks as the Chinese economy restarts. German sporting-gear rivals Adidas AG and Puma SE said they saw a drop in business — of 85% in the case of the former — due to store closures in China. As well as the human and economic impact from the outbreak, there appears to be growing dissent within the Asian nation as authorities attempt to ramp up propaganda messages.
China is considering further measures to protect the country’s economy from the worst of the fallout from the virus. Already this week has seen the People’s Bank of China provide medium term lending for banks and cut the interest rate it charges for that money. Attention now seems to be turning to the airline industry, one of the hardest hit in the wake of numerous travel bans. The options range from mergers to direct cash injections in the struggling carriers.
Investors will be eager to see if there is more detail on the Federal Reserve’s plans to end the expansion of its balance sheet when the minutes of the Jan. 28-29 meeting are published at 2:00 p.m. Eastern Time. Any comments on the repo market, and the speed at which the bank intends to withdraw liquidity support, will also be closely watched. There is unlikely to be much on the possible effects of the coronavirus on the U.S. economy as concerns have only intensified since the meeting was held.
Reports of further Chinese measures to support its economy have helped lift equities. Overnight, the MSCI Asia Pacific Index climbed 0.3% while Japan’s Topix index closed 0.4% percent higher as the yen gave weakened. In Europe, the Stoxx 600 Index had gained 0.6% by 5:45 a.m. in a broad-based recovery. S&P 500 futures pointed to a higher open, the 10-year Treasury yield was at 1.549% and gold’s strong recent performance continued.
The Federal Reserve dominates the agenda, and not only because of the release of the minutes. Bankers scheduled to speak at different times today: Atlanta Fed President Raphael Bostic, Cleveland Fed President Loretta Mester, Minneapolis Fed President Neel Kashkari, Dallas Fed President Robert Kaplan and Richmond Fed President Thomas Barkin. In economic data, 8:30 a.m. sees the publication of the U.S. January housing starts number and PPI for the month. Tonight’s Democratic presidential nomination debate will be the first to include Michael Bloomberg. (Bloomberg is the founder and majority owner of Bloomberg LP, the parent company of Bloomberg News.)