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Five Things You Need to Know to Start Your Day
(Bloomberg) --
Good morning. Coronavirus cases surge, the euro is testing lows and the U.K. government is set for a reshuffle. Here’s what’s moving markets.
Cases Surge
Asian stocks dipped on Thursday as traders digested the news that the number of coronavirus cases is much higher than originally reported after patients tested using a different method are included. After much supposition in recent days that authorities were getting the virus under control, this surge in diagnoses could darken sentiment. China has removed officials heading the province and city at the center of the outbreak and markets will have to reset their expectations around how long the process of getting control of the disease will take.
Euro Lows
The clearest indicator yet of the concern investors have about the health of the European economy emerged as the euro fell to its weakest level against the dollar since 2017. Jitters are growing that Germany is headed for recession due to the lingering impact the coronavirus looks set to have on the health of global economy, with Deutsche Bank now expecting contraction in the fourth quarter of 2019 and little to be excited about in the first quarter of 2020. A slump in euro area industrial output, a lingering succession battle at the top of Germany's government and fears on the health of Italy’s economy are unlikely to brighten that picture.
Oil Demand
Oil prices have been recovering in recent days but the surge in new cases of coronavirus reported in China has caused that rally to run into some turbulence. Even beyond that, risks remain. OPEC has slashed its demand forecast in its monthly report on the oil market, primarily due to the shutdowns caused by the virus outbreak hitting demand for fuel in China. The market is still awaiting a full response from its main producers, though Russia’s biggest oil companies voiced support for the idea of an output cut to prop up crude prices, so the prospect of OPEC and its partners reaching a deal seems to have been boosted.
Reshuffle
It promises to be another closely scrutinized day in British politics, with the outcome of a wide cabinet reshuffle due to be announced. There is an expectation of a number of changes, though most of those with the top briefs are set to remain, including chancellor, foreign secretary and, following confirmation that the huge HS2 high-speed rail project will proceed, transport secretary. Those watching will be looking at whether Prime Minister Boris Johnson will use the reshuffle to promote pro-EU ministers in order to heal the divisions that have plagued the country’s politics in recent years.
Coming Up…
On the earnings front, we’ve already had numbers from plane manufacturer Airbus SE, which beat earnings expectations, and Swiss lender Credit Suisse Group AG, which posted a fourth-quarter beat on net revenue but a miss on net income. Later we’ll get an update from Barclays Plc, the first of the U.K.’s big lenders to report on the state of play following the December election. U.S. inflation data will arrive in the European afternoon, more European Central Bank policymakers are scheduled to speak and South African President Cyril Ramaphosa is to give his state of the nation address.
What We’ve Been Reading
This is what’s caught our eye over the past 24 hours.
- Mobile World Congress has been canceled.
- Stock picking in 12 countries in 12 months.
- Two rich heirs join forces on a Hollywood deal.
- Office romances are alive and well.
- Jeff Bezos dropped $165 million on a Beverly Hills home.
- Five things to redefine how you fly.
- Why do people kiss?
To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net
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