Five Things You Need to Know to Start Your Day
Get up to date on what’s moving global markets this morning.
(Bloomberg) --
Xi Jinping releases an unusually timed speech concerning his involvement in the coronavirus outbreak, Apple doesn’t expect to meet its revenue target for the March quarter and the top 1% fund that bet on Tesla stock just before the big bounce is dishing out investment advice. Here are some of the things people in markets are talking about today.
On Saturday, the ruling Communist Party’s top theoretical publication, Qiushi Journal, released a speech showing that President Xi Jinping was directing efforts to contain the country’s spreading novel coronavirus on Janiuary 7, nearly two weeks before his first public remarks on the topic. It’s unusual, because the comprehensive account of Xi’s involvement upended the previous official narrative on China’s response. Now, it’s prompting speculation about why it was unveiled just last weekend. “It’s extremely rare for Qiushi to release one of Xi’s internal speeches just two weeks after he made it,” said Gu Su, a professor of philosophy and law at Nanjing University who has written books about China’s political system. “This exception was made under the pressure of public opinions after doctor Li Wenliang’s death and the escalation of the harm caused by the epidemic.” Elsewhere health authorities around the world are mobilizing to prevent a further spread of the coronavirus after an American guest from the ship was found to be infected; doctors studying a 50-year-old man who died from the new coronavirus found the disease caused lung damage reminiscent of two prior coronavirus-related outbreaks, SARS and MERS; and the virus has trapped a significant portion of Hong Kong's silent economic power: its maids and nannies.
Asian stocks look set for a mixed start Tuesday as investors assessed whether China’s efforts to support its economy will offset the impact of the coronavirus outbreak. Futures slipped in Tokyo and were little changed in Sydney and Hong Kong, and the yen pared a modest decline after Apple said it won’t meet its quarterly revenue guidance due to virus-related work slowdowns and lower demand. Earlier, European equities climbed alongside U.S. equity futures with U.S. markets shut for a holiday, while Treasuries didn’t trade. The pound fell after Prime Minister Boris Johnson’s envoy attacked the European Union’s stance ahead of trade talks. Elsewhere, Bitcoin fell back below $10,000, while West Texas crude oil climbed above $52 a barrel.
Apple doesn’t expect to meet its revenue guidance for the March quarter due to work slowdowns and lower demand caused by the outbreak of the novel coronavirus in China. “Work is starting to resume around the country, but we are experiencing a slower return to normal conditions than we had anticipated,” the company said in a statement. Apple said global iPhone supply will be “temporarily constrained.” All manufacturing partner facilities have reopened, but they are ramping up more slowly than expected. Apple had forecast revenue of $63 billion to $67 billion for the fiscal second quarter ending in March. Analysts on average estimated $65.23 billion, according to data compiled by Bloomberg.
If you’re seeking advice from the top 1% fund that bet on Tesla stock just before the big bounce, you’re in luck. The Australian managers of a top-performing global equities fund which returned 28% over the last three years and bested 99% of peers, according to data compiled by Bloomberg, say companies need to prioritize innovation in order to withstand an economic slowdown over the next decade. That’s why Hyperion Asset Management Ltd. is investing in companies that can thrive in a low-growth environment by using technology efficiently. It added Tesla last month, just before the stock’s meteoric rise sent its market cap to $160 billion. The world economy is set to deteriorate over the next five to 10 years, beset by issues such as climate change, high debt levels and aging populations, according to the Brisbane-based firm. “If you’re not innovative and creative, then you’re going to find it difficult to grow your revenues because the overall economic pie is not going to be growing very much,” said Chief Investment Officer Mark Arnold in an interview in Sydney earlier this month. Here’s how Hyperion determines whether or not a company is innovative enough to make it into the fund.
The Australian wildfires that blackened an area nearly the size of England are just the beginning of the Aussie’s climate woes. Still, the currency could find long term relief from cyclical downturns — if only the country’s government decides to take climate change seriously, according to ABN Amro Bank NV. The Dutch bank expects the country’s focus to turn toward environmental policies after wildfires wrecked havoc on the economy and hurt the currency. A switch to a greener economy could alter the fundamental performance of the Aussie, making it less driven by global risk sentiment, says its senior foreign-exchange strategist Georgette Boele. If the government makes climate policy more of a priority, “the Australian dollar will probably become less cyclical, less commodity-driven, and less dependent on the state of the Chinese economy and more driven by the state of the domestic economy,” she said in a note to clients. The Aussie dollar has been hurt by the spread of the coronavirus, which is seen as impacting Chinese demand for Australian commodities. It is among the worst-performing Group-of-10 currencies this year, leading losses alongside fellow risk-sensitive currencies the New Zealand dollar and Norwegian krone, having dropped more than 4% in 2020.
What We’ve Been Reading
This is what’s caught our eye over the past 24 hours.
- Amazon’s Jeff Bezos says he’ll commit $10 billion to fight climate change.
- I flew to see my parents and ended up in coronavirus quarantine.
- Nissan shareholders are set to choose new directors as business plummets.
- It’ll be ‘Namaste Trump’ in India after ‘Howdy Modi’ in Texas.
- The virus outbreak is underscoring Takeda’s bet on vaccines, according to their CEO.
- Here’s what the coronavirus means for the world’s first pandemic bonds.
- Musk’s SpaceX launched its fifth batch of Starlink satellites.
To contact the editor responsible for this story: Alex Millson at amillson@bloomberg.net
©2020 Bloomberg L.P.