Sixth Straight Day Of Selling, Dollar Falling On Fed Bets

Markets are in the red again this morning but interestingly it is China (GXC) which is holding up the best with the CSI 300 index in the black. However, other Asian bourses including both the Hong Kong-based Hang Seng index and the Japanese Nikkei 225 were negative yesterday. The number of new cases of coronavirus was greater outside of China for the first time yesterday, with northern Italy being particularly badly affected, but also South Korea and potentially California emerging as hotspots for the virus. Oil (OIL) continued its decline and the dollar also pulled back as markets called for action from the Federal Reserve to help alleviate the economic damage from the virus. The euro has gained over 1.3% on the greenback since sinking to 3 year lows earlier this month.

Major stock indices in both the US and UK pared their early losses and leveled off somewhat yesterday, after two days of 3% plus falls. That said most still ended the day in the red. The Dow Jones Industrial Average (DIA) ended the day 0.5% lower, with 22 of its 30 constituent stocks falling, while the S&P 500 (SPX) ended the day down 0.4%. Amongst the choppy trading, some of the travel names that were hardest hit earlier in the week continued to sink like a stone. We have mentioned easyJet (ESYJY) a couple of times already this week and it is down another 8% this morning. The spread of the coronavirus epidemic outside of China is stoking fears of more widespread travel restrictions which would hit the bottom line of firms ranging from airlines to booking services. Royal Caribbean Cruises (RCL), Norwegian Cruise Line (NCL), Carnival (CCL) and Expedia (EXPE) fell the furthest among S&P 500 stocks, each losing more than 7%. The Nasdaq Composite (COMP) was a bright spot yesterday, climbing 0.2%, with a 5.3% pop for Netflix (NFLX) helping drive the index higher.  

Changing of the Bobs at Disney, while Microsoft warns virus will hit revenue

Yesterday, Microsoft (MSFT) stock sank 2% in after-hours trading, following the announcement that it expects to miss its quarterly revenue guidance for its Windows and Surface units, due to supply chain issues caused by the coronavirus epidemic. While investors were focused on virus headlines, it was a day of change at the top of some of America’s leading companies. Late on Tuesday The Walt Disney Company (DIS) surprised investors by announcing that CEO Bob Iger was leaving the top seat, with head of parks and resorts Bob Chapek taking over the role immediately. The firm’s share price has lagged the broader market over the past five years, and has had a poor start to 2020. At the same time as Disney’s news, Salesforce announced that co-CEO Keith Block is stepping down after less than two years in the role. Lastly, the world’s largest asset manager BlackRock (BLK), announced that co-founder and public policy lead Barbara Novick is stepping down. In a note yesterday, BlackRock CEO Larry Fink said that “much of the post-financial crisis policy work that Barbara led is largely implemented”, referring to her role in helping the fund giant avoid the kinds of regulation faced by the major banks.  

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