Weekly Market Digest: Morgan Stanley Announces It Will Buy E*Trade

It was a short week for trading that ended with a risk-off tone. Defensive sectors like consumer staples and utilities held in relatively well, while more cyclical sectors like technology and consumer discretionary took a beating on Friday. Global financial markets digested new information regarding the increase in Coronavirus cases surfacing outside of China. The virus is seen to be at a pivotal point for containment that could go either way.

Weekly Returns

S&P 500: 3337.75 (-1.25%)
FTSE All-World ex-US (VEU): (-1.49%)
US 10 Year Treasury Yield: 1.46 (-0.13)
Gold: $1,642.6 (3.77%)
EUR/USD: 1.0848 (0.14%)

Major Events

  • Monday – Jeff Bezos, CEO of Amazon, announced he is launching a new fund called the Bezos Earth Fund, a $10 billion initiative to fund efforts toward climate change.
  • Tuesday – Shares of Apple stock took a hit Tuesday after warning disruptions in iPhone manufacturing, due to the Coronavirus, would cause it to miss its revenue guidance for the quarter.
  • Wednesday – Fed minutes showed officials were content with no change to current monetary policy.
  • Wednesday – The IMF reiterated their view of stabilizing global growth but cited the coronavirus as one of the main concerns that could alter the outlook.
  • Thursday – Morgan Stanley announced its plan to buy discount broker E*Trade.
  • Friday – The 30-year U.S. Treasury yield dropped near all-time lows Friday as fear of broader contagion outside of China dominated headlines.

Our Take

If the sudden rise of cases of coronavirus outside of China continues to escalate, it would jeopardize what appears to be a recent bottoming in global growth which is already on rocky ground. So far it has been a solid corporate earnings season, but the virus has already created supply chain disruptions causing concern on what the actual fallout will be. Most agree the risk of the virus on the global economy is real and developments are being followed closely.

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