U.S. Futures Down After Coronavirus Reports

February 24, 2020
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U.S. stock market futures fell during the weekend, suggesting that major indexes will open in negative territory for trading on Monday. The decline in confidence is related to the most recent news on the global Coronavirus outbreak.

Futures on the Dow Jones Industrial Average were down -1.38% on Sunday, the S&P 500 futures were down -1.42%, and NASDAQ 100 futures were down -1.8%.

International Monetary Fund Gives Warning

The International Monetary Fund warned over the weekend that the Coronavirus could slow global economic growth by 0.1% in 2020. While this might seem like a small figure, it represents tens of billions in global investment and income.

Although the U.S. is yet to suffer any serious outbreak or threat of Coronavirus, companies that do business in China will see an impact on their revenue and earnings. Large companies like Apple (NASDAQ: AAPL), Nike (NYSE: NKE), Boeing (NYSE: BA), and GE (NYSE: GE) are expected to take a hit.

Some companies that are particularly exposed to the Chinese market, like the Danish shipping company Maersk (OMX: MAERSK.B), could see up to a 5% drop in revenue this year. This gives investors a worst-case scenario to apply to companies like Apple.

Will There Be Panic in the U.S. Markets?

Coronavirus hasn’t left the headlines since China announced a major outbreak in Wuhan earlier this year. However, most of the activity and news have been isolated to China.

New developments over the weekend will change this. In South Korea, a seventh death and more than 160 new cases were reported over the weekend. This Asian nation is a major ally to the U.S. and a global technology hub for innovation and manufacturing.

Italy had detected just three cases before Friday last week. It now has 150 confirmed infections and a third death. The worst affected towns have been quarantined and effectively sealed off. Austria temporarily suspended rail services to Italy after the news.

In the Middle East, 43 cases and eight deaths were announced over the weekend, following news of just two cases earlier in the week.

This all suggests that the virus is beginning to have more of an impact globally. Confirmed infections have now reached 77,150, with deaths at 2,592 as of Monday morning.

The United States has confirmed just 14 cases from 414 people tested and no deaths. But the drop in market futures suggests that investors are less worried about a spread in America, and more concerned about how the virus could affect international markets where U.S. businesses operate.

Investors, as always, are advised to closely monitor their portfolios and any exposed stocks. While markets are likely to open lower on Monday, fundamental economic strength in America has not changed, and the bull market likely has plenty of momentum left in it.

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