Europe Stocks Slip With U.S. Futures; Dollar Jumps: Markets Wrap - Yahoo Finance

(Bloomberg) -- European stocks fell and U.S. equity futures edged lower as investors pored over the latest reports about the spread of the coronavirus beyond China and a batch of lackluster corporate earnings. The dollar jumped.

The Stoxx Europe 600 Index slipped as South Korea reported its first fatality from the disease after cases there more than doubled. Earnings from some of the continent’s biggest companies also underwhelmed, from Belgian brewer Anheuser-Busch InBev SA to French insurer AXA SA and Telefonica SA of Spain. Futures on the S&P 500 Index turned lower after Japan reported two deaths from the virus. In Asia, gains in Shanghai, Tokyo and Sydney were countered by declines in rest of the major markets.

The yen extended its slump, weakening toward 112 per dollar, with market participants ascribing a host of reasons, ranging from disappointing economic news to early positioning before the fiscal year-end next month. Treasuries climbed.

While the number of new coronavirus cases in China continues to come down, those beyond the mainland are sparking alarm. Earnings misses from some of Europe’s biggest names are adding to the gloom, with companies continue to warn on the virus’s impact. On Thursday, the world’s largest container shipping company A.P. Moller-Maersk A/S said 2020 will be marred by “considerable uncertainties” due to the outbreak’s impact on global trade. Air France-KLM guided earnings lower.

Here are some key events coming up:

Earnings season rolls on, with results from Deere & Co. set for Friday.Group of 20 finance ministers and central bank chiefs are due to meet Feb. 22-23 in Riyadh, Saudi Arabia, and are expected to discuss efforts to support growth amid the coronavirus threat.

These are the main moves in markets:

Stocks

The Stoxx Europe 600 Index fell 0.3% as of 9:29 a.m. London time.Futures on the S&P 500 Index dipped 0.1%.Nasdaq 100 Index futures declined 0.2%.The MSCI Asia Pacific Index sank 0.5%.The MSCI World Index of developed countries decreased 0.1%.

Currencies

The Bloomberg Dollar Spot Index increased 0.3%.The euro was unchanged at $1.0805.The Japanese yen weakened 0.4% to 111.80 per dollar.The South Korean Won depreciated 0.8% to 1,198.37 per dollar.

Bonds

The yield on 10-year Treasuries sank two basis points to 1.55%.Germany’s 10-year yield decreased one basis point to -0.42%.Britain’s 10-year yield was steady at 0.592%.

Commodities

West Texas Intermediate crude increased 0.3% to $53.46 a barrel.Gold weakened 0.1% to $1,610.60 an ounce.LME aluminum declined 0.4% to $1,712.50 per metric ton.Iron ore rose 2.4% to $89.15 per metric ton.

--With assistance from Cormac Mullen and Adam Haigh.

To contact the reporter on this story: Todd White in Madrid at twhite2@bloomberg.net

To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Yakob Peterseil

For more articles like this, please visit us at bloomberg.com

Subscribe now to stay ahead with the most trusted business news source.

©2020 Bloomberg L.P.

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2020-02-20 09:39:00Z
CBMiSmh0dHBzOi8vZmluYW5jZS55YWhvby5jb20vbmV3cy9qYXBhbi1zdG9ja3MtcmlzZS15ZW4tc2xpZGVzLTIzMTYxNjQwOC5odG1s0gFSaHR0cHM6Ly9maW5hbmNlLnlhaG9vLmNvbS9hbXBodG1sL25ld3MvamFwYW4tc3RvY2tzLXJpc2UteWVuLXNsaWRlcy0yMzE2MTY0MDguaHRtbA

Maersk warns of coronavirus impact as earnings miss expectations - MarketWatch

Danish shipping giant A.P. Moeller-Maersk AS said Friday that it made weaker-than-expected fourth-quarter earnings and warned that it expects a weak start to the year with limited visibility for the rest of 2020 amid the coronavirus outbreak.

Maersk MAERSK.A, +1.50% MAERSK.B, +1.35%  swung to an unexpected net loss in the quarter of $72 million from a profit of $46 million in the year-earlier period. A FactSet analyst poll had expected a net profit of $343 million. It said that its financials are materially impacted by implementing the IFRS 16 accounting standard and 2019 figures aren’t comparable with last year.

Maersk, which is considered a barometer of global trade, saw revenue fall 5.6% to $9.67 billion, missing expectations of $9.94 billion, as its shipping unit lowered capacity to adjust to market conditions.

Earnings before interest, tax, depreciation and amortisation for the quarter came in at $1.46 billion against expectations for $1.53 billion. For the full-year, Ebitda rose to $5.71 billion, meeting the company’s own guidance of between $5.4 billion and $5.8 billion.

The company’s main shipping unit saw revenue fall as volumes dropped 1.8% while freight rates slipped 0.4%. Maersk said it continued to cut its cost base at the unit while lower fuel prices also helped offset some of the weakness.

Volumes were hit in both East-West and North-South routes, amid continued slower growth in the U.S. and front loading of orders in the same quarter last year ahead of anticipated tariffs, lower demand in Europe, continued weak demand in Latin America, and weakened market conditions in West and Central Asia and Oceania.

Maersk said the outlook and guidance for 2020 is subject to significant uncertainties and impacted by the current outbreak of the Coronavirus (COVID-19) in China, which has significantly lowered visibility on what to expect in 2020.

“As factories in China are closed for longer than usual in connection with the Chinese New Year and as a result of the COVID-19, we expect a weak start to the year,” the company said.

The organic volume growth in its main ocean unit is expected to be in line with or slightly lower than the estimated 2020 average market growth of 1% to 3%.

Accumulated gross capex for 2020-2021 is still expected to be $3.0 billion-$4.0 billion.

Maersk declared an unchanged full-year dividend of DKK150.

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2020-02-20 07:49:00Z
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Nasdaq hits record as China pledges to stimulate coronavirus-hit businesses - MarketWatch

U.S. stock benchmarks traded modestly higher at the start of Wednesday’s session as investors took some optimism from measures China says it has taken to help coronavirus-stricken businesses, helping to push the Nasdaq Composite to a new all-time high.

How are benchmarks performing?

The Dow Jones Industrial Average DJIA, +0.27% advanced 105 points, or 0.3%, to 29,337. The S&P 500 SPX, +0.43% rose 13 points, or 0.4%, to 3,383. If the S&P 500 finishes above 3,380.16, it will set a new closing high. The Nasdaq Composite COMP, +0.77% added 61 points, or 0.5%, to 9,794.

On Tuesday, the Dow shed 165.89 points, or 0.6%, to settle at 29,232.10, while the S&P 500  lost 9.87 points or 0.3% to close at 3,370.29. However, the Nasdaq Composite Index  gained 1.57 points, or less than 0.1%, to finish at a record 9,732.74, after flipping positive in afternoon trade.

What’s driving the market?

U.S. stocks have remained in an uptrend for February, helped by corporate earnings reports, despite the potential for slowing global economic growth due to disruptions to trade and travel caused by COVID-1, the infectious disease that originated in Wuhan, China late last year.

Chinese officials have said the rate of new cases has begun to ebb, but the World Health Organization has recommended caution.

On Wednesday, investors also appeared heartened by comments from China’s Ministry of Industry and Information Technology, which said Beijing would help companies to identify weak links in supply chains, The Wall Street Journal reported.

The assistance is one of several steps that Beijing and local Chinese authorities have taken to limit the economic fallout of the coronavirus, which has sickened 75,200 people and claimed more than 2,000 lives. Help is focused on small and medium-size businesses in Hubei province and include temporary cuts to taxes, low-interest-rate loans for farmers and rent reductions for businesses, according to the South China Morning Post.

Looking ahead, investors will watch for cues from the Federal Reserve, which will release minutes from its policy meeting last month, where the central bank held benchmark rates at a 1.50%-1.75% range and said it would monitor the coronavirus impact on the global economy.

“COVID-19 remains the market driver and is set to frame policy makers’ reactions around the world over the near-term,” wrote Han Tan, market analyst at FXTM, in a research report.

“The global economic outlook remains mired in uncertainty at this point in time, with coronavirus-related warnings emanating out of Apple and corporate America,” he said, referring to Apple Inc.’s warning on Monday, which weighed on stocks on Tuesday.

In U.S. economic reports, the Commerce Department said housing starts fell 3.6% in January to an annual pace of 1.57 million, but permits rose to a 13-year high of 1.55 million. U.S. producer prices jumped 0.5% last month, its biggest increase in 15 months.

“Net, net, the economy looks good with residential home building activity beating expectations and a little more producer price inflation even if the data overstate how well the country is doing in terms of generating the growth and inflation the Federal Reserve wants to see,” said Chris Rupkey, chief economist at MUFG.

Which Fed speakers are on deck?

• Minneapolis Fed President Neel Kashkari is due up at 11:10 a.m.
• Dallas Fed President Robert Kaplan speaks at 1 p.m.
• Richmond Fed President Thomas Barkin is scheduled to make remarks at 4:30 p.m.

Which stocks are in focus?

• Garmin Ltd. GRMN, +7.70% shares rose after the company reported results that were better than expected.
• Bausch Health Cos. Inc. shares BHC, -9.82% fell after reporting quarterly results.
• Analog Devices shares ADI, +4.62% climb after Wall Street earnings beat.
• Philip Morris stock PM, +0.07%  slump after earnings falls short of expectations.
• Tesla Inc.’s stock TSLA, +8.51%  shot above $850 after a Benstein analyst said it saw no “imminent” negative catalyst.
• Uber Technologies Inc. UBER, +0.86%   shut down its Los Angeles office, but its shares traded higher on Wednesday.

How are other assets performing?

The price of a barrel of West Texas Intermediate crude for March delivery CLH20, +0.98% rose 1.4% to $52.79 a barrel on the New York Mercantile Exchange.

Gold for April delivery GCJ20, +0.29% added 0.2% to reach 1,606.90 an ounce, extending its climb above the psychologically important level at $1,600.

The U.S. dollar DXY, +0.21% was little-changed against a basket of rival currencies at 99.60.

The benchmark U.S. 10-year Treasury note TMUBMUSD10Y, +0.06% was up slightly at 1.57%. Bond yields fall when prices rise.

In Europe, the Stoxx Europe 600 SXXP, +0.72% advanced 0.6%, while the FTSE 100 UKX, +0.91% climbed 0.8%.

In Asia overnight, the China CSI 300 000300, -0.15%  ended 0.2% lower to close at 4.051.31, the Shanghai Composite SHCOMP, -0.32%  edged down 0.3% at 2,975.40, and the Hang Seng Index HSI, +0.46% gained 0.5% to 27,655.81. The Nikkei 225 NIK, +0.89% rose 0.9% to 23,400.70.

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2020-02-19 14:56:00Z
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Burger King thinks moldy Whoppers will get you to buy more burgers - CNN

The burger chain on Wednesday unveiled pictures of its new, preservative-free Whopper. In the campaign, the Whopper is covered in mold, decaying as it's consumed by green fungus.

The unconventional marketing effort includes a TV commercial showing the all-natural Whopper slowly rotting over the course of 34 days as soul singer Dina Washington's 1959 hit "What a Difference A Day Makes" plays in the background. Deliberately absent are food coloring and special effects commonly used to make restaurant meals and their ingredients look appetizing in commercials. By the end of the 45-second commercial, the Whopper has transformed into a green and blue mess.

"The beauty of no artificial preservatives," the ad's tagline reads.

The moldy Whopper may look revolting, but Restaurant Brands International (QSR), which owns Burger King, is betting customers are craving healthier, organic ingredients. Just over half of Millennials and 57% of Millennial parents said they are buying more organic products now than they did five years prior, according to a September YouGov analysis commissioned by Whole Foods. A 2018 Nielsen report also found young adults are more willing to pay higher prices for products made with natural, more environmentally-friendly ingredients.

Burger King restaurants throughout most of Europe have already done away with food preservatives amid an industry-wide shift toward healthier and organic ingredients.

"We believe that real food tastes better," Restaurant Brands International Global Chief Marketing Officer Fernando Machado said in a statement. "That's why we are working hard to remove preservatives, colors and flavors from artificial sources from the food we serve in all countries around the world."

Whopper fans in the United States may have already tasted a preservative-free Whopper without realizing it, according to Christopher Finazzo, president if Burger King's Americas division.

"The product is already available in more than 400 restaurants in the country and will reach all restaurants throughout the year," Finazzo said in a statement.

McDonald's (MCD), Burger King, and Wendy's (WEN) are the three largest burger chains in the United States. McDonald's stopped using preservatives in its burgers in 2018, two years after removing antibiotics from its chicken supply chain. Wendy's did not immediately respond to request for comment.

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2020-02-19 12:02:00Z
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Why Apple's coronavirus caution is nothing like last year's China warning: Morning Brief - Yahoo Finance

Wednesday, February 19, 2020

Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe

Demand delayed versus demand destroyed

With U.S. markets closed on Monday, Apple (AAPL) announced that it would not meet its first quarter revenue guidance because of coronavirus.

The company cited two factors in its press release: global supply constraints due to Apple’s factories coming back online slower than anticipated and Chinese demand declines because fewer people are shopping and stores are open for fewer hours.

On Tuesday, shares of Apple fell 1.8%. The broader market, however, was mixed — the S&P 500 dropped 0.29% and the Nasdaq actually gained ground, rising 0.02%.

And while this news surely brought to mind Apple’s January 2019 warning, analysts saw the company’s latest cautionary statements as outlining a mere delay in demand because of coronavirus, not a destruction of demand as suggested in Apple’s trade war commentary of 2019.

Perhaps not surprisingly, then, Wall Street analysts remained generally positive on Apple following the company’s latest China-related warning. And while Apple’s financial results will be impacted in the short-term, in the mind of many analysts the longer-term story for the company both in China and around the world is unchanged. In fact, it may have even improved.

“We are lowering our estimates for the Mar-20 quarter, but leaving estimates for all other future periods unchanged,” said Michael Olson, analysts at Piper Sandler in a note to clients published Tuesday.

“We believe any material weakness in AAPL shares as a result of the Mar-20 quarter revenue shortfall will prove to be a buying opportunity, as, in all likelihood, this is a temporary situation that will leave future quarters largely unaffected. In fact, the iPhone supply constraints in the current quarter could result in pent-up demand for future quarters.” (Emphasis added.)

Piper Sandler has a $343 price target and an Overweight rating on Apple shares.

Katy Huberty at Morgan Stanley said in a note Tuesday that Apple’s margins don’t appear at risk, writing that, “the March quarter shortfall is entirely tied to labor, rather than component, constraints and Apple doesn't expect any meaningful component cost inflation at this time.”

Huberty adds that, “a larger than expected demand-related shortfall will just increase estimates in future quarters as we don't view demand as perishable in light of strong retention rates among iPhone owners.”

Morgan Stanley has a $368 price target and Overweight rating on Apple shares. The firm said they are buyers on any weakness in the stock.

Jeffrey Kvaal at Nomura Instinet wrote Tuesday that the “silver lining” in Apple’s guidance cut is that pent-up demand for iPhones may get pushed all the way back to the company’s next flagship release, iPhone 12.

“We do not yet believe Apple’s iPhone 12 timelines are in jeopardy,” Kvaal writes. “Demand that slips into the iPhone 12 cycle may feed the ‘supercycle’ narrative that has fueled Apple’s shares of late.”

Employees wear face masks as they stand in a reopened Apple Store in Beijing, Friday, Feb. 14, 2020. (AP Photo/Mark Schiefelbein)

In 2019, Apple blamed the trade war and a greater-than-forecast deceleration in China’s economy as hurting its business during the all important holiday quarter.

“As the climate of mounting uncertainty weighed on financial markets, the effects appeared to reach consumers as well, with traffic to our retail stores and our channel partners in China declining as the quarter progressed,” CEO Tim Cook said at the time. “And market data has shown that the contraction in Greater China’s smartphone market has been particularly sharp.”

Apple shares fell 10% the day after this news while the broader market fell almost 3%. The market of early 2019 was not inclined to put lipstick on Apple’s pig. But this dire warning also marked the bottom for both the company’s stock and the overall market.

Fading corporate warnings about the macro environment was a profitable trade for 2019 and has been a resilient theme in the early days of 2020. For the full-year 2019, Apple shares gained 86% while the S&P 500 rose 30% and the Nasdaq climbed 36%.

Tom Lee at Fundstrat said in a note Tuesday that Apple’s warning offers investors the “first hints” of what we’re likely to see in first quarter results. “And it should be sloppy,” Lee added.

But given the global nature of coronavirus concerns — across both geographies and sectors — these negative impacts aren’t likely to be a “thesis killer” for a market most strategists expect to climb higher throughout the year.

By Myles Udland, reporter and co-anchor of The Final Round. Follow him at @MylesUdland

What to watch today

Economy

• 7:00 a.m. ET: MBA Mortgage Applications, week ended Feb. 14 (1.1% prior)

• 8:30 a.m. ET: Housing starts month on month, January (1.425 million expected, 1.608 million prior)

• 8:30 a.m. ET: Building permits month on month, January (1.45 million expected, 1.42 million prior)

• 8:30 a.m. ET: PPI final demand month on month, January (0.1% expected, 0.2% prior)

• 8:30 a.m. ET: PPI final demand year on year, January (1.6% expected, 1.3% prior)

• 8:30 a.m. ET: PPI final demand excluding food and energy month on month, January (0.2% expected, 0.1% prior)

• 8:30 a.m. ET: PPI final demand excluding food and energy year on year, January (1.3% expected, 1.1% prior)

• 2:00 p.m. ET: Federal Open Market Committee January meeting minutes

Earnings

Post-market

• 4:15 p.m. ET: Boston Beer Company (SAM) is expected to deliver adjusted earnings of $1.54 per share on revenue of $283.8 million for the fiscal fourth quarter of 2019

READ MORE

Top News

FILE - In this Dec. 16, 2019, file photo a worker looks up underneath a Boeing 737 MAX jet in Renton, Wash. Boeing sold no new airline jets in January, and now the company is worried that the virus outbreak in China could hurt airplane deliveries in the first quarter. (AP Photo/Elaine Thompson, File)

Boeing discovers debris in 737 MAX fuel tanks [Yahoo Finance UK]

Energy, clothing, and airfares drive surprise jump in UK inflation [Yahoo Finance UK]

Unilever, 3M on list of firms eligible for China loans to ease coronavirus crisis [Reuters]

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2020-02-19 10:59:00Z
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Fuel prices push UK inflation to six-month high - BBC News

UK inflation in January rose to a six-month high as petrol and house prices rose, official figures show.

The Consumer Prices Index (CPI) stood at 1.8% last month, up from 1.3% in December, the Office for National Statistics said.

"The rise in inflation is largely the result of higher prices at the pump and airfares falling by less than a year ago," the ONS said.

The rise is ahead of economists' CPI forecast of 1.6% in January.

CPI remains below the Bank of England's 2% target for inflation. Wednesday's inflation data pushed the value of the pound above $1.30. Versus the euro, the pound had started the day down 0.25% but rose back to trade flat against the single currency.

However, some analysts said that the new figures were unlikely to "move the dial" on the central bank's next decision on interest rates in March.

Why is inflation rising?

Mike Hardie, head of inflation at the ONS, said: "The rise in inflation is largely the result of higher prices at the pump and airfares falling by less than a year ago. In addition, gas and electricity prices were unchanged this month, but fell this time last year due to the introduction of the energy price cap."

Fuel prices were up 4.7% compared with a year earlier, marking the biggest rise since November 2018. Energy regulator Ofgem's cap on energy bills meant that the average household could not be charged more than £1,137 annually for their gas and electricity.

The ONS also said that annual house prices rose across all regions of the UK, the first time this has happened in nearly two years.

The cost of living fell in January. Before you get too excited though - it normally does, compared with a month before, due to January sales and a slowing demand for goods and services following the Christmas break, which pulls prices down on average.

This year, however, electricity and gas bills didn't fall as they did in 2019 when the energy price cap kicked in. And discounts in the January sales for clothing and footwear weren't as deep as they were a year ago. That meant they exerted less downward pressure on the average cost of living than most had expected.

In turn, that means there is now less of an expectation that the Bank of England will have to try and support the economy by cutting interest rates any time this year.

The most recent wages data released on Tuesday showed that average weekly wages in the UK reached their highest levels since before the financial crisis. Weekly pay reached £512 in the three months to December, which - adjusting for inflation - is the highest since March 2008.

Excluding bonuses, earnings grew at an annual rate of 3.2% in the three months to December.

Inflation is one key factor the Bank of England's Monetary Policy Committee (MPC) considers when setting the "base rate". That influences what interest rate banks can charge people to borrow money, or what they pay on their savings.

If it thinks inflation is likely to be below 2%, it may cut interest rates to lower the cost of borrowing and therefore encourage spending.

'Unlikely to move the dial'

Ruth Gregory, senior UK economist at Capital Economics, said that the latest inflation figures were "unlikely to move the dial on the outlook for interest rates".

She said: "For the MPC, the fact that inflation is in line with its projections provides another reason not to cut interest rates in the near-term." The rate currently stands at 0.75%. The MPC is next due to meet on 26 March.

Robert Alster, head of investment services at Close Brothers Asset Management, said that a similar cautious approach might be taken by new Chancellor of the Exchequer Rishi Sunak in his March Budget.

He said: "Rishi Sunak is likely to use the Budget to announce a welcome boost to longer-term investment, but abide by the fiscal rules for short-term spending until the fog has cleared" around Brexit.

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2020-02-19 11:15:00Z
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737 Max: Debris found in new planes' fuel tanks - BBC News

Boeing's crisis-hit 737 Max jetliner faces a new potential safety issue as debris has been found in the fuel tanks of several new planes which were in storage, awaiting delivery to airlines.

The head of Boeing's 737 programme has told employees that the discovery was "absolutely unacceptable".

A Boeing spokesman said the company did not see the issue further delaying the jet's return to service.

It comes as the 737 Max remains grounded after two fatal crashes.

The US plane maker said it discovered so-called "Foreign Object Debris" left inside the wing fuel tanks of several undelivered 737 Maxs.

A company spokesman told the BBC: "While conducting maintenance we discovered Foreign Object Debris (FOD) in undelivered 737 Max airplanes currently in storage. That finding led to a robust internal investigation and immediate corrective actions in our production system."

Foreign Object Debris is a technical term that covers any substance, debris or article that isn't part of a plane which would potentially cause damage.

The revelation is the latest in a string of problems affecting what was once Boeing's best-selling plane.

The aircraft has been grounded by regulators around the world since March 2019.

It was banned from flying after two separate crashes killed 346 people.

737 Max timeline

• 29 October 2018: A 737 Max 8 operated by Lion Air crashes after leaving Indonesia, killing all 189 people on board
• 31 January 2019: Boeing reports an order of 5,011 Max planes from 79 customers
• 10 March 2019: A 737 Max 8 operated by Ethiopian Airlines crashes, killing all 157 people on board
• 14 March 2019: Boeing grounds entire 737 Max aircraft fleet

The US regulator, the Federal Aviation Administration (FAA), told the BBC that it was monitoring the plane maker's response to the new issue: "The FAA is aware that Boeing is conducting a voluntary inspection of undelivered aircraft for Foreign Object Debris (FOD) as part of the company's ongoing efforts to ensure manufacturing quality.

"The agency increased its surveillance based on initial inspection reports and will take further action based on the findings," it added.

Boeing said it didn't expect the issue to cause any fresh delays to the 737 Max's return to service, which the company said could happen by the middle of this year.

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2020-02-19 08:55:07Z
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