It’s a new day, a new month, and a new week in the stock market today. Now that Super Sunday is over and we know who the champions of the NFL are, what do we do now? Well, as history has suggested, markets have leaned toward a bearish year-end when an AFC team wins the big game. But for the last 4 super Sunday games, the “Superbowl Indicator” has been incorrect. We’ve got 11 months to see if it can be wrong for a 5th year. Needless to say, it’s time to get the ball rolling on the stock market today.
What has emerged as an initial concern has now morphed into a full-on epidemic. The coronavirus continues to spread, U.S. companies are closing down stores, and airlines are canceling flights to and from China. Meanwhile, in the EU, we’re now beginning to see the evolution of a “post-Brexit” economy. The UK and EU are still in a spat regarding tariffs. Furthermore, the formal outcome or lack thereof has simply lead to more confusion than anything in Europe. This having been said, there’s a lot to keep in mind in the stock market today so let’s see what’s in store.
Stock Market Today: Global Data Suggests Softening Conditions
Purchasing managers’ indexes (PMI) suggest softening growth. This is according to data across Europe. As discussed earlier this year with regard to the IMF, 2020 could be a year of contraction. In line with this, PMI data pointed to slower growth. In the Eurozone, IHS Markit saw PMI increase to 47.9.
That’s a touch higher than the expected 47.8 but well-below the 50-line where you see a pivot between contraction and expansion. U.S. PMI figures will come out later this morning along with U.S. vehicle sales figures later tonight. The Institute of Supply Management’s manufacturing survey will also be released just before 11 AM EST.
What has also become a concern in the interim has been sterling prices thanks to Brexit. The pound dropped 1% against the USD and roughly 0.8% compared to the Euro. Boris Johnson, the U.K. Prime Minister, expressed his stance to actually accept tariffs. EU members haven’t yet agreed to any such scenario. However, they may give the European Commission a mandate to negotiate a free-trade deal with the U.K.
Stock Market Today: China’s Market, Coronavirus, and More
The coronavirus continues to fuel concerns of an economic slowdown in the world’s second-largest economy. China’s markets tanked on Monday with both the Shanghai and Shenzhen dropping roughly 8%. This occurred in light of an injection of some $22 billion into the domestic money market by China’s central bank. However, there haven’t been any major changes in the coronavirus story. The confirmed case number rose to more than 17,200 with 361 total confirmed deaths so far.
This has resulted in more companies reverting to drastic measures. The United States and governments in Europe and Asia are now pushing for new regulations to actually block visitors from China. Major airlines will also suspend flights to the companies. Even companies like Apple will close all of its stores and corporate offices in China through February 9.
Other companies like Levi are also feeling the strain. The clothing company opened its largest Chinese store in Wuhan last year. Since the outbreak gained steam, the company closed thousands of outlets across the country. This isn’t limited to manufacturing and retail either. McDonald’s and Starbucks also shut down outlets in China.
Are Markets Set To Bounce?
After Friday’s market rout, concern grew over the weekend. However, even with China’s markets declining, the U.S. and European markets edged higher. Dow futures, S&P futures, and Nasdaq futures all indicated a bullish open on February 3. European markets also opened higher.
This week we will see earnings from Google parent, Alphabet after the closing bell today. This will be the first report under the guidance of its new leadership of Sundar Pichal. Most investors will be paying close attention to the fine details. This includes things like YouTube and its Waymo unit.
Twilio will also report this week in addition to others like 21st Century Fox, Clorox, ConocoPhillips, Callaway Golf, O’Reilly Auto, Activision Blizzard, Bristol-Myers, World Wrestling Entertainment, Abbvie, and others which could swing the market in one direction or another.