Five Things You Need to Know to Start Your Day
Get up to date on what’s moving global markets this morning.
(Bloomberg) --
The SARS-like virus from central China is spreading, Trump and Macron seem to be working at a dispute resolution and the IMF has predicted global growth will pick up for 2020 — the first acceleration estimate in three years. Here are some of the things people in markets are talking about today.
China has reported a fourth death from a new SARS-like virus, which includes symptoms like fever and coughing. The illness, which originated in central China, is spreading from person to person and has sickened medical workers, heightening concern about the risk of wider transmission. The number of coronavirus cases in China surged over the weekend and health authorities worldwide increased testing. The timing couldn't be worse: With Lunar New Year just days away — a holiday season during which the nation’s citizens rack up 3 billion trips across the country to reunite with family — the spread of the virus could intensify. Wuhan, the central Chinese city at the center of the outbreak, now has almost 200 confirmed cases, and infections have also been reported in Beijing, the southern Chinese province of Guangdong, South Korea, Thailand and Japan. Here’s why China’s food markets can be breeding grounds for deadly viruses.
Asian stocks looked set to drift Tuesday after modest losses in Europe in trading muted by a U.S. holiday. Crude oil pared gains related to supply disruptions in Libya and Iraq. Futures dipped in Japan, Hong Kong and South Korea. European stocks edged lower and U.S. equity futures were little changed on Monday as investors awaited a fresh batch of corporate earnings and some key central bank meetings this week. The U.S. dollar pared earlier gains after France announced an agreement with the U.S. on a truce in their digital-tax dispute until at least the end of this year. Most European bonds ticked higher, while the pound was slightly weaker ahead of U.K. jobs data due tomorrow.
U.S. President Donald Trump seems to be on a roll when it comes to cooling tariff disputes. Hot on the heels of a “phase one” trade deal with China last week, Trump and French President Emmanuel Macron have agreed to a truce in their dispute over digital taxes, a French diplomat said. Now neither side will impose punitive tariffs this year, and the two countries will continue negotiations along with their European partners until the end of 2020 in order to agree a global framework that ensures tech companies pay an appropriate amount of tax. The detente brings Europe and the U.S. back from the brink of a full blown trade war: The U.S. had been threatening tariffs as high as 100% on $2.4 billion of French goods in retaliation after Macron last year hit multinational companies — many of them American — with a tax on their digital revenues, and the EU had said it would retaliate.
Confidence is surging through China’s stock market, with traders boosting leverage and pumping in funds in ways not seen in years. Investors have driven margin debt past the key 1 trillion yuan ($146 billion) level to the highest since February 2018. Privately offered funds have boosted their stock positions to the highest since early 2015, and foreign buying has continued this month after December’s record inflows. Analysts are the most bullish on large caps since late 2014, according to data compiled by Bloomberg. Such signals follow a year in which a big early rally was halted by trade war escalations. With sentiment now reinforced by the phase-one trade deal and signs the economy is stabilizing, there’s optimism that stocks will continue their ascent after the week-long Lunar New Year break which begins on Friday.
The International Monetary Fund predicted the world economy will strengthen in 2020, albeit at a slightly weaker pace than previously anticipated amid threats related to trade and tensions in the Middle East. Global growth will accelerate this year to 3.3% from 2.9% in 2019, the fund said on Monday. That’s the first pickup in three years — but less than the 3.4% projected in October. The 2019 estimate was reduced for a sixth time. The report, however, contained some modest hope, noting that risks are “less skewed” toward negative outcomes. The sense that global growth is stabilizing is shared by many economists, as well as some central banks. For the IMF, which sees growth accelerating to 3.4% in 2021, the positives include signs that the slump in manufacturing and global trade is bottoming out, “intermittent” good news on U.S.-China trade talks and accommodative monetary policy.
What We’ve Been Reading
This is what’s caught our eye over the past 24 hours.
- Wall Street wants to conquer China. Here’s what could go wrong.
- A new study ends decades of doubt over a Van Gogh self-portrait.
- Peter Schiff says he’s lost his Bitcoin after wallet freeze-out.
- The Trump and Thunberg Show: The latest from Davos.
- Vietnam’s tough new drunk driving law is hurting beer sales.
- The EU won't recommend banning Huawei in upcoming 5G risk rules.
- Netflix will start streaming the popular Studio Ghibli animated films next month.
To contact the editor responsible for this story: Alyssa McDonald at amcdonald61@bloomberg.net
©2020 Bloomberg L.P.