Wall St set to fall again as coronavirus spreads beyond China

Wall St set to fall again as coronavirus spreads beyond China

US stock index futures edged lower on Friday as a spike in new coronavirus cases in China and elsewhere sent investors scrambling for safer assets such as gold and government bonds, according to Reuters.

The risk-off mood was exacerbated by data showing Japan’s factory activity suffered its steepest contraction in seven years in February, underlining the risk of a recession in the world’s third-largest economy as the outbreak takes a toll on global growth.

With massive disruptions in supplies from China, parts shortages are hitting businesses as far away as the United States.

US stocks fell more than 1 per cent at one point on Thursday, with Microsoft Corp and Apple Inc taking the biggest hit.

Beijing reported an uptick in cases of coronavirus on Friday and South Korea reported 100 new cases that doubled its infections, while more than 80 people have tested positive for the virus in Japan.

However, hopes that central banks across the globe will take measures to counter a slowdown have cushioned global stocks and kept the benchmark S&P 500 near all-time highs.

“The economy here in the United States is doing well and people are worried about the next quarter earnings season and what kind of impact the coronavirus is going to have,” said Robert Pavlik, chief investment strategist at SlateStone Wealth LLC in New York.

At 8:38 a.m. ET, Dow e-minis were down 95 points, or 0.33 per cent. S&P 500 e-minis were down 11.5 points, or 0.34 per cent and Nasdaq 100 e-minis were down 29.75 points, or 0.31 per cent.

Investors will keep an eye on IHS Markit’s US manufacturing and services sector activity data for February, due at 9:45 a.m. ET, to gauge the impact of coronavirus on businesses.

A host of Federal Reserve officials including Dallas Fed’s Robert Kaplan and Cleveland Fed President Loretta Mester are set to speak later in the day.

Traders are looking for signs on whether the Fed will cut rates this year amid fears of the coronavirus outbreak denting global growth. However, recent data has suggested US economy is showing no signs of losing steam.

Among stocks, Dropbox Inc jumped 12.5 per cent in premarket trading after it raised its outlook for operating margin, while Deere & Co rose 6.1 per cent after an unexpected rise in first-quarter profit.

Sprint Corp climbed 6.4 per cent as it announced new merger terms with T-Mobile US that would reduce the stake of major Sprint shareholder SoftBank. T-Mobile shares dipped 0.9 per cent.

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