By Geoffrey Smith
Investing.com -- Stock markets jump on tentative reports of progress in developing drugs to fight the coronavirus, whose impact continues to reverberate as Apple (NASDAQ:AAPL) supplier Hon Hai warns of a hit to production. Pete Buttigeig wins in Iowa while President Trump and Speaker Pelosi trade insults at the State of the Union speech. The ADP (NASDAQ:ADP) payrolls report for January is due, along with the ISM's non-manufacturing survey. And NYSE owner ICE (NYSE:ICE) confirms it looked at a bid for eBay (NASDAQ:EBAY), while General Motors (NYSE:GM) and Qualcomm (NASDAQ:QCOM) head another long list of earnings Wednesday. Here's what you need to know in financial markets on Wednesday, 5th February.
1. Coronavirus toll nears 500; markets grasp at news of drug progress
The death toll from the coronavirus reached 493, another rise of over 16% on the previous day, but more than twice as many people infected by the disease have now recovered. Fatal cases remain highly concentrated in the Hubei region around Wuhan, where the outbreak originated.
Markets in Europe picked up on reports of progress by lab researchers with drugs aimed at treating the disease, while an institute in Wuhan applied for a patent on an antiviral drug developed by Gilead Sciences (NASDAQ:GILD), threatening to revive U.S.-China tensions over intellectual property.
Apple (NASDAQ:AAPL) supplier Hon Hai revised down its sales outlook for the year citing the virus, while Disney said it expects the closure of its theme parks in Shanghai and Hong Kong to hit operating profits by a combined $175 million.
2. Stocks, oil set for higher opening on virus optimism
U.S. stock markets are set for another strong opening, helped by more solid gains in Asia and Europe overnight, which in turn reflected the Chinese central bank’s liquidity measures this week and the – still somewhat speculative - reports of progress in finding drugs to treat the coronavirus.
By 6:30 AM ET (1130 GMT), Dow 30 futures were up 264 points or 0.9%, while S&P 500 futures were up 0.9% and Nasdaq 100 futures were up 1.0%.
In China, the Shanghai Composite had ended up 1.3% while in Europe, the Stoxx 600 was up 1.1%.
Crude oil futures had rebounded overnight after dipping below $50 for the first time in a year. U.S. crude futures were up 2.9% at $51.06 a barrel, while gold futures were flat at $1,556.15 and the U.S. 10-Year benchmark Treasury yielded 1.64%, up three basis points from late Tuesday.
The bounce in crude is set to be tested by the release of government inventory data at 10:30 AM ET (1530 GMT).
3. GM earnings in focus after Ford slumps; ICE-eBay tie-up also eyed
Earnings seasons grinds on, with the focus Wednesday falling on General Motors after Ford Motor slumped 10% in after-hours trading on the back of a gloomy outlook for 2020. Ford’s figures made for an interesting counterpoint to the wild, but volatile, surge in Tesla (NASDAQ:TSLA) stock on Tuesday amid signs that the company’s valuation had lost all relation to any realistic development in sales and profit in the near term.
Also reporting in the course of the day are pharma giant Merck, Humana, Boston Scientific , Spotify and Metlife. Qualcomm completes day's action after the bell.
Another stock likely to be in focus Wednesday is Intercontinental Exchange Group. ICE (NYSE:ICE), which owns the New York Stock Exchange, confirmed late on Tuesday it had offered to buy struggllng online marketplace eBay (NASDAQ:EBAY), in a radical departure for a group which has so far concentrated only on wholesale financial markets. ICE stock, which fell 7.5% on Tuesday on initial reports of talks, recovered 0.8% in after-hours trading as it emerged that no talks were currently in progress.
4. ADP's report to trail Friday payrolls ballyhoo
ADP (NASDAQ:ADP) will update the market on the U.S. private-sector labor market, amid expectations of a slowdown in hiring at the start of the year after the December numbers surged to a seven-month high.
Analysts polled by Investing.com expect a gain of 156,000 in what is widely seen as the dress rehearsal for the broader government report on payrolls on Friday. The report is due at 8:15 AM ET.
Economic data around the world were mixed: China’s service-sector purchasing managers index fell short of expectations, while the same index in the euro zone outperformed, pushing the composite PMI to a five-month high of 51.3. The ISM’s survey of non-manufacturing activity will be released at 10 AM ET.
5. Buttigeig wins in Iowa as Washington theatricals intensify
Pete Buttigeig emerged as the winner of the Democratic Party’s Iowa caucuses, with Vermont Senator Bernie Sanders a close second and Massachusetts Senator Elizabeth Warren a respectable third. Former Vice-President Joe Biden trailed badly in fourth place after a lackluster campaign.
Buttigeig capitalized on the inability of Sanders and Warren to campaign more actively in the state during the impeachment trial of President Donald Trump, which is expected to end today with his acquittal by a Republican-controlled Senate.
Trump’s State of the Union address on Tuesday passed without any major policy initiatives being announced, leaving the public to focus on a theatrical exchange of insults between the President and House Speaker Nancy Pelosi.