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Top 5 Things to Know in the Market on Thursday, Feb. 27th

EconomyFeb 27, 2020 06:39AM ET
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© Reuters.

By Geoffrey Smith

Investing.com -- The Center for Disease Control and Prevention confirmed the first case of the coronavirus on U.S. soil with no links to China, while the virus continues to spread across Asia and Europe. Global stocks have reacted negatively to the news and U.S. markets are set to open in risk-off mode again, with bond yields testing record lows - not least due to Microsoft's warning late on Wednesday that it will miss its quarterly sales target. Budweiser brewer AB Inbev's latest figures also showed it has been hit hard by the collapse of social drinking in China. Here's what you need to know in financial markets on Thursday, February 27th.

1. Coronavirus in U.S. makes a big step

The U.S. Center for Disease Control and Prevention confirmed the first case of the coronavirus on U.S. soil with no links to China, raising fears that the ‘community spread’ of which the CDC warned earlier in the week will soon become reality.

On Wednesday evening, President Donald Trump had put Vice-President Mike Pence in charge of coordinating the U.S.’s response to the outbreak. Trump said the risk to the American people “remains very low.”

Elsewhere, Japan ordered its schools to shut from March 2 to stop the outbreak spreading, while Saudi Arabia said it would refuse to accept pilgrims travelling to religious sites such as Mecca and Medina.

The number of confirmed cases in South Korea continued to rise sharply, while a woman in Japan tested positive for the virus for the second time, proving that re-infection is possible. In China, a leading virologist who predicted the outbreak would be contained by mid-February pushed back his timeline for that to April.

2. Global stocks retreat again

Global stocks and bond yields fell, with the exception of China, amid increasing signs that the viral outbreak is abating there. China announced fewer new cases of Covid-19 on Thursday than South Korea.

European stocks fell as much as 2.5%, spooked by the news out of the U.S. and by the disease’s spread through Europe. Airlines and travel companies were again particularly hard hit, with the continent’s discount flyers all down over 21% in the last week.

By 6:35 AM ET, the benchmark Stoxx 600 was down 2.5%, while the U.K. FTSE 100 was down 2.1%.

3. U.S. to open in risk-off mode; Microsoft's sales warning hurts mood

Risk aversion is set to be in full flood again when U.S. markets open, as participants reprice the threat to corporate earnings. Microsoft (NASDAQ:MSFT) joined Apple (NASDAQ:AAPL) last night in saying it would miss its first-quarter sales target, without giving a new one.

By 6:35 AM ET, the Dow 30 futures contract was down 265 points, or 1.0%, while the S&P 500 futures contract was down 1.0% and the Nasdaq 100 contract down 0.9%.

U.S. government bond yields have collapsed this week as appetite for haven assets has soared. The Fed-sensitive 2-year bond yield has fallen to 1.11%, implying at least two 25 basis point cuts from the Federal Reserve over the next couple of years. The 10-year Treasury yield meanwhile hit a new record low of 1.29% overnight.

Gold futures are firm above $1,650 an ounce, while U.S. crude futures have fallen over 2% to their lowest since the end of 2018 at $47.59 a barrel. Brent was also down over 2% at $51.59.

4. AB Inbev hit hard by virus in China

The world’s biggest brewer has the sector’s biggest problems. Anheuser Busch Inbev (BR:ABI) stock fell 9.3% after reporting extremely weak figures for the fourth quarter of 2019, blaming commodity and foreign exchange factors for exaggerating the slowing trend in global beer consumption.

Net profit fell 75% from a year ago and revenue fell 1.3%, despite a 1.1% rise in sales volume, suggesting that the company’s efforts at premiumization – squeezing more value out of a stable of brands that includes Budweiser and Michelob – are struggling to make headway.

Budweiser APAC, which was spun out of the parent company last year, issued a particularly stark warning that the Covid-19 outbreak had caused sales in China to fall by $285 million in the first two month of the year, as restaurants, bars and other nightlife venues suffered. That will translate into a $170 million hit to EBITDA over those months, it added.

It’s a busy day for corporate earnings, with Workday, Autodesk, EOG Resources, Occidental and Monster Beverage all set to report.

5. U.S. GDP revision, durable goods and jobless claims all due

The U.S. will update its estimate for gross domestic product in the fourth quarter of last year at 8:30 AM ET, but those backward-looking numbers are likely to be overshadowed by durable goods orders for January and last week’s initial jobless claims, both of which are due at the same time.

Data released earlier in Europe showed no major hit to European consumer or business confidence so far, the European Commission’s economic sentiment index rising more strongly than expected to 103.5, the highest since June.

The euro has rebounded against the dollar over the last 24 hours. By 6:30 AM, it was up 0.5% at $1.0938.

Top 5 Things to Know in the Market on Thursday, Feb. 27th
 

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Comments (13)
Leo Lee
Leo Lee Feb 27, 2020 5:06PM ET
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Yep had to be california the pro democrat state.
Marc Man
Marc Man Feb 27, 2020 2:12PM ET
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Lol the picture is hilarious
Jack Drummond
Jack Drummond Feb 27, 2020 9:16AM ET
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What a great Top 5 today. Pulling on reality, facts- not some mumbo-jumbo wet-dream, conjured up by Dear Leader.. Yes, he was once able to pull the wool over eyes by lying about medical facts, he beat the Viet Nam draft- but now Cadet Bone Spurs is flailing. Just flailing. He's going to lose his miraculous 'greatest economy ever' and crash his political runaway train- just in time for the November elections. What a terrible price to pay to spotlight his grandiose ineptitude. He fired all the people we need now to marshal our path through an unavoidable pandemic- DHS, CDC, HIH- and sent hapless Mike Pence to officiate over this harrowing tale.
Pwr Strk
Pwr Strk Feb 27, 2020 9:16AM ET
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your chinese ascendance is pouring with covid19-like hate
Jack Drummond
Jack Drummond Feb 27, 2020 9:16AM ET
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Pwr Strk I don't know why you think I have Chinese ascendance, they're no better than Trump. And no, my feelings are not hate, but hopefulness that we will all recognize that the Emperor has no clothes. Sad.
Alexander Telis
Alexander Telis Feb 27, 2020 9:09AM ET
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Considering how few people died from Coronavirus even comparing to the flu (20,000 deaths from flu per year in the US alone) the hysteria has been rocking the market is likely overblown. Perfect opportunity for the democrats to drop the market before the elections. Media is definitely helping them. But for the investors it should be a buying opportunity.
Azam Khan
Azam Khan Feb 27, 2020 8:48AM ET
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I think virus is inside this market it should named coronasdaq not coronovirus
Gannas barazi
Gannas barazi Feb 27, 2020 8:42AM ET
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extremely ,  negative report
ASIKHULULE LUSAVELA VUKEMINI
ASIKHULULE LUSAVELA VUKEMINI Feb 27, 2020 8:09AM ET
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Is eur/usd going up or down now
Saviour Ubi
Saviour Ubi Feb 27, 2020 8:09AM ET
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With this article, I think it will go up soon, that is if it's not going up already
Domenic Perillo
Domenic Perillo Feb 27, 2020 7:35AM ET
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now the market is in sell mode... good thing I stocked up in gold and silver... we will find a cure in and once we do ... the day we do .... by oil !👍
Rob Mac
Rob Mac Feb 27, 2020 7:34AM ET
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Top 5 things ...1. Virus2. Virus3. Virus (maybe)4. Virus5. Durable goodsDid I miss anything?
Kyle Mack
Kyle Mack Feb 27, 2020 7:15AM ET
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Bitcoin will soar. GBTC
vincent li
vincent li Feb 27, 2020 7:10AM ET
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i would buy AMZN if see 1920-1950 today...when they roll out their check outless supermarkets all other supermarkets are RIP
Jarrod Rodamet
Jarrod Rodamet Feb 27, 2020 7:05AM ET
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What is eveyones dream stock and what price are u hoping to buy it at. Id like to pick up amzn under 1900
Lukman Firdaus
Lukman Firdaus Feb 27, 2020 6:51AM ET
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visa money $ 33.000
Ahmad Rana
Ahmad Rana Feb 27, 2020 6:51AM ET
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hi sir what are you thinking in guar gum
 
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