Powell Talks, Indian Crisis, Alibaba Fine, Microsoft M&A - What's up in Markets

© Reuters

By Geoffrey Smith 

Investing.com -- Jerome Powell predicts a surge in hiring and economic growth - but still wants you to wear a mask and keep socially distanced. India's pandemic woes go from bad to worse, and take the rupee and local stocks lower. The U.K. meanwhile has opened its pubs and non-essential shops again after reaching key thresholds in its vaccination campaign. U.S. stocks are edging lower ahead of the start of a big earnings season, while Alibaba (NYSE:BABA) stock leaped after the Chinese Communist Party chose not to impose the harshest possible antitrust fine on it. Microsoft (NASDAQ:MSFT) is on the verge of its biggest acquisition since 2016. Here's what you need to know in financial markets on Monday, April 12th. 

1. Powell talks up economy; 10-year note auction due

The U.S. economy is about to emerge from its Covid-19 hibernation in style, Federal Reserve Chairman Jerome Powell said in an interview aired by CBS’s ’60 Minutes’ on Sunday.

“We feel like we’re at a place where the economy is about to start growing much more quickly and job creation coming in much more quickly,” Powell said in an interview that was recorded on Wednesday. “The outlook has brightened substantially. And that’s the base case.”

His comments were published a day ahead of the Treasury’s latest 10-year note auction, which will test the market’s ability to reconcile the expected growth spurt with still-modest inflation expectations.

Powell warned that the pandemic still posed a risk to the U.S. economy, saying that the continued use of social distancing and mask-wearing is “smart”. New infection numbers in the U.S. have edged up steadily for the last two weeks.

2. Alibaba leaps on relief at Chinese antitrust fine

Alibaba shares in Hong Kong leaped after the company said a $2.8 billion antitrust fine announced at the weekend drew a line under the biggest regulatory concern ever faced by the e-commerce giant.

The fine, handed down for anti-competitive behavior toward merchants on its main marketplace, amounted to 4% of its annual domestic revenue, well below the 10% maximum allowed by law.  Alibaba will also have to pay heavily to ‘rectify’ past conduct errors.

That was enough to convince market participants that the company has largely appeased the ruling Communist Party, after becoming one of the main targets of a campaign apparently aimed at clipping the wings of an increasingly influential tech sector.

3. Stocks edge lower ahead of earnings season; big deal for Microsoft

U.S. stock markets are set to open lower, consolidating after closing at new record highs on Friday, ahead of the start of a keenly-anticipated earnings season.

By 6:30 AM ET (1030 GMT), Dow Jones futures were down 81 points, or a little more than 0.2%, at 33,601 points, while the S&P 500 futures contract and Nasdaq 100 futures were both down by fractionally less.

Stocks likely to be in focus later include Microsoft (NASDAQ:MSFT), which was reported by Bloomberg and others to be in talks to buy AI software group Nuance Communications (NASDAQ:NUAN) for $19 billion, which would make it the tech giant’s biggest deal since LinkedIn (NYSE:LNKD) five years ago. Also in focus is diagnostics company Luminex (NASDAQ:LMNX), which agreed to be bought by Italy’s DiaSorin (MI:DIAS) for $1.8 billion.

The earnings week gets off to a quiet start with results from cannabis company Aphria (NASDAQ:APHA).

4. India's Covid crisis deepens (but its gasoline demand soars)

The Indian rupee fell to its lowest in over eight months after the country recorded another surge in coronavirus cases, underlining its status as the world’s hottest Covid-19 hotspot right now.

The Nifty 50 and BSE Sensex 30 benchmark stock indices both fell by some 3.5% to their lowest since the start of February, while the dollar rose above 75 rupees.

The numbers came as the market awaited March inflation data with some trepidation. Annual inflation is expected to have accelerated to some 5.4%.

The surge had a stimulative effect on oil consumption, however, with gasoline consumption rising to a four-month high in March as people shunned public transport in favor of cars.

5. Let's go down the pub

There was better news on the pandemic front from the U.K., where England reopened non-essential shops and beer gardens and outside dining areas, in response to a sharp decline in new infection rates.

New infections and deaths have both fallen to their lowest levels since September, against the backdrop of a relatively rapid vaccination campaign that has led to 32 million people – over half the adult population - receiving at least one shot so far.

France and Germany have also recorded a marked acceleration in their vaccination campaigns, with France passing the 10 million mark at the weekend. The EU has now given 21 of its population at least one shot of vaccine. Germany remains on track for another lockdown nonetheless, with Chancellor Angela Merkel looking to introduce a new bill transferring powers for fighting the pandemic from the country’s states to the federal government as early as this week