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 has spread to the U.S., Jack Ma is flexing his muscles in the payments market, and Australian wine could be the latest commodity damaged by the wildfires. Here are some of the things people in markets are talking about today.
There’s now been a confirmed case in the U.S. of the viral lung illness originating from central China, putting more pressure on health officials to contain an outbreak that has infected hundreds of people in Asia and spread to five countries, reviving fears of SARS. Six deaths have been reported, all in China. U.S. Centers for Disease Control and Prevention officials said Tuesday that a case had been identified in Washington state from a person recently traveling in China. Since the new coronavirus was first detected in December, the number of infections has grown to 291, with 139 of them found over the past weekend. The U.S. case is a man in his 30s who was traveling in China and arrived back in the U.S. on Jan. 15, Washington State health officials said on a call with the CDC Tuesday. The officials said the man sought care quickly after monitoring news about the virus and is in good condition, though has been hospitalized out of an abundance of caution. Health officials still don’t know how dangerous the virus is or exactly how it spreads, but the rapid rise in illnesses has prompted tightened borders and a rapid attempt to trace contacts of those who have become ill.
Asian stocks looked set for a mixed start as investors mulled reports that China’s coronavirus had migrated to the U.S. Treasuries climbed and the yen extended gains. Futures dipped in Japan, pointed higher in Hong Kong and were little changed in Australia. U.S. and European shares saw modest losses. Luxury stocks headed for their biggest drop since October on worries the virus will disrupt spending during a key Chinese holiday period. Industrial and consumer shares were among the worst performers as the S&P 500 Index fell from a record high, and the yuan weakened. Elsewhere, Germany’s DAX Index briefly surpassed the peak reached two years ago. West Texas crude held around $58 a barrel as ample global supplies offset the loss of exports from Libya.
As Visa, Mastercard and American Express prepare to enter China for the first time, one of their biggest competitive threats will come from a company that doesn’t issue credit cards. Jack Ma’s Ant Financial, already the biggest player in China’s $27 trillion payments market, is leveraging its ubiquitous Alipay mobile app to mount a rapid expansion into consumer lending. Instead of issuing cards, Ant allows customers to borrow with a few taps on their smartphones. The loans are wildly popular among China’s army of mobile-savvy shoppers, who often lack formal credit histories but generate enough financial data via Alipay for Ant to make informed decisions on whether they’ll default. The company’s outstanding consumer loans may swell to nearly 2 trillion yuan ($290 billion) by 2021, according to Goldman Sachs analysts, more than triple the level two years ago.
Bad news for wine lovers: The devastating wildfires that swept through the east and south of Australia in recent months could have yet another consequence — spoiling some of the 2020 wine vintage in a country that counts China, the U.S. and the U.K among its biggest customers. While most vineyards escaped direct damage from the inferno that claimed almost 30 lives and destroyed more than 2,700 homes, some growers are anxious to see if grapes have been contaminated by direct exposure to the choking smoke which has blanketed many rural areas as well as major cities. The fires destroyed swathes of vines in the Adelaide Hills and pockets of production in New South Wales and Victoria, but the affected area represents just 1% of the country’s vineyards, said Tony Battaglene, chief executive officer of industry group Australian Grape and Wine. “The bigger impact is the potential for smoke damage,” he said in an interview Tuesday. But the so-called smoke taint, where grapes develop unpalatable flavors or smells like ash or wet cigar, is hard to measure, and grapes can’t be checked until they start to ripen, which will happen in the coming weeks.
Huawei's CEO isn’t worried about the looming threat that the U.S. will impose even stricter sanctions against his company. Founder Ren Zhengfei said he was confident China’s largest tech company can survive further attacks from Washington. Tighter restrictions on the sale of American technology to the telecommunications giant — something the White House is considering — will not have a very significant impact on Huawei, the billionaire chief executive said during a panel discussion at the World Economic Forum in Davos. “This year, the U.S. might further escalate its campaign against Huawei but I feel the impact on Huawei’s business would not be very significant,” he said in response to a question about U.S. curbs. “We’re confident we can survive further attacks.” Huawei has risen to global prominence as the No. 2 smartphone maker and a leader in the fifth-generation wireless technology that will underpin future advances from autonomous cars to robotics. It’s also become a major target for the U.S. as China’s technological prowess grew along with its ambitions
What We’ve Been Reading
This is what’s caught our eye over the past 24 hours.
- A catastrophic drop in tourism haunts Hong Kong.
- The sun-kissed Australian dream is dying in the wildfires.
- For many hedge funds in Asia, 2019 was good, but not good enough.
- After the Harley smuggling scandal, Garuda Indonesia is to get a new CEO.
- Xi Jinping vowed not to tighten Beijing’s control on Hong Kong, says Carrie Lam.
- China is the emissions behemoth. Can it change fast enough?
- The biggest ocean polluters are raising rates to offload fuel burden.
- Palm products worth $1.4 billion in the crossfire as Mahathir angers India.
To contact the editor responsible for this story: Alex Millson at amillson@bloomberg.net
©2020 Bloomberg L.P.