By Geoffrey Smith
Investing.com -- The death toll from the coronavirus jumped again, although there were tentative signs of a slowdown in reports of new cases. Global stock and oil prices tumbled, and Wall Street is also set for a lower opening as a result. Tesla is set to surge to new record highs after a better-than-expected fourth quarter, while the U.S. will get its first reading of fourth-quarter GDP at 8:30 AM ET. And Mark Carney may do what Jerome Powell chose not to do and cut interest rates at the Bank of England, in what will be the Canadian's last meeting before giving up the governorship. Here's what you need to know in financial markets on Thursday, 30th January.
1. Coronavirus death toll rises as virus spreads further
China reported its biggest single-day jump in coronavirus deaths, the toll rising to 170 from 132 on Wednesday. The number of confirmed cases in China now stands at 7,711, up from 5,974 a day earlier.
The rate of growth in confirmed cases appears to be slowing to around 30% from 50% earlier in the week. Also, the fatality ratio remains well below that for the SARS epidemic, with only 2.2% of reported cases leading to death so far.
However, the disease continues to spread, with India reporting its first confirmed case. Elsewhere, Russia said it would close its (highly-porous) border with China. The World Health Organization is meeting again on Thursday to review its decision not to declare the outbreak a matter of global concern.
2. Q4 GDP reading to cast light on Fed inaction
The U.S. gets its first reading of gross domestic product in the fourth quarter of last year at 8:30 AM ET (1330 GMT).
Analysts expect the annualized rate of growth to have stayed at the relatively modest 2.1%, as the slowdown caused by trade conflicts with China and others continues to drag.
The update comes a day after the Federal Reserve gave little sign of easing monetary policy further in the near term, even though Chairman Jerome Powell reiterated that the central bank wasn’t happy with inflation still below target and remains alert to the risk of global disinflationary trends – trends that seem likely to be reinforced in the near term due to the impact of the coronavirus on the Chinese economy.
3. Stocks, oil tumble on virus fears again
U.S. stock markets are set to open sharply lower as the rising death toll from the coronavirus once again rattled confidence around the world, with participants also conscious that the Fed is not in any hurry to come and bail them out again.
By 6:30 AM ET (1130 GMT), Dow 30 futures were down 227 points or 0.8%, while S&P 500 futures were down 0.8% and Nasdaq 100 futures were down 0.7%.
That’s despite support from better-than-expected earnings late on Wednesday from large-caps Microsoft (NASDAQ:MSFT), Facebook (NASDAQ:FB), Mondelez (NASDAQ:MDLZ) and PayPal.
U.S. crude oil futures also suffered, falling below $52 a barrel for the first time in three months.
The earnings stream out of Europe was mixed on Thursday, with Royal Dutch Shell (LON:RDSa) stock hitting a three-year low after heavy writedowns and falling margins forced it to slow its mammoth buyback program. Deutsche Bank (DE:DBKGn), by contrast, beat expectations, although its numbers were flattered by windfall gains in bond trading.
4. Carney to cut before leaving Bank of England?
The Bank of England will decide at 7 AM ET (1200 GMT) whether or not to cut its own official interest rates, a day before the U.K. formally ends its 46-year membership of the European Union.
The decision is set to be a close one, with analysts polled by Investing.com seeing a 6-3 vote in favor of keeping the bank’s key rate unchanged at 0.75%, despite a flurry of comments from policy-makers suggesting they were inclined to ease policy to shield it from a slowdown caused by Brexit uncertainty and the spillovers from the U.S.-China trade dispute.
Recent data – from house prices to the Markit Purchasing Managers’ Index – have produced more upside than downside surprises, which may incline the Monetary Policy Committee to wait until it sees the new government’s spending plans in March before taking the plunge.
The GBP/USD was rangebound around the $1.3000 level ahead of the decision, the last to be overseen by Governor Mark Carney before he departs.
5. Tesla's Q4 sets it up for surge to new record high
Tesla (NASDAQ:TSLA) stock is set to hit new records at the opening after surging 11% in after-hours trading on the back of a stronger-than-expected quarterly report.
CEO and founder Elon Musk predicted that deliveries will “comfortably exceed” 500,000 this year, an increase of 35%, and also said he expected positive profit and cash flow figures to be the rule, rather than the exception, in future.
Both revenue and profit beat expectations in the fourth quarter, although revenue grew only 2% and the profit margin fell as the higher-volume, lower-margin Model 3 increasingly dominated the sales mix.
Elsewhere on Thursday, the company said it had entered into a partnership with CATL and LG Chem , the biggest makers of electric vehicle batteries in China and South Korea, to supply batteries for its electric cars. It has so far depended on Japan’s Panasonic.