Wednesday, March 18, 2020

Tech Giants Keen To Surge Market Sentiment

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What’s happening: Global markets have experienced wide swings, amid fears of the pandemic pushing the biggest economies into recession. Leading indices have gained and lost hundreds of points during the course of a trading session.

US stock trading was halted twice last week and once this week to give a breather to panic-stricken traders, while major European stock indices, China's Shanghai Composite and Japan's Nikkei have matched the volatility.

Where eagles dare: Companies are facing a double whammy with reduced demand due to a decline in consumer spending and supply disruptions caused by lockdowns and travel restrictions.

In the meantime, however, the world’s biggest companies are taking initiatives to protect the interest of their stakeholders. Here’s a look at the companies that were lauded by President Donald Trump during his election campaign and termed as “MAGA” - Microsoft, Apple, Google parent Alphabet and Amazon.

These four tech companies didn’t become giants by fluke. Even amid supply glitches and market shocks, the world’s four largest companies by market cap continue to forge ahead.

Microsoft: This Redmond-based company is gearing up to announce its latest subscription product on March 30. The software behemoth has been working on a consumer version of its subscription service Microsoft 365, a package that includes Office 365, Enterprise Mobility and Windows 10. The consumer version of the service is expected to include Office 365, Outlook Mobile, Skype and many other services.

Apart from this offering, likely to be named Microsoft 365 Life, the company just announced a new interactive called Bing map that provides information on the COVID-19 outbreak. The map shows details of where the cases are being reported, the number of cases reported as well as those that are currently active, recovered or deceased.

Apple: The iPhone maker was hit hard by the coronavirus outbreak in China but is now reopening its stores in the country. Apple is expected to make a comeback by launching new iPad Pro models. The new iPad is expected to include rear triple-lens camera with 3D depth sensing and may include a new Smart Keyboard.

Apple is also working on cheaper models, including a small iPhone SE2 and a bigger iPhone SE. These models will replace the expensive Face ID with Touch ID.

Alphabet: Google has announced plans to launch a national website in partnership with the US government aimed at providing coronavirus information to the public. The website will provide information on COVID-19 symptoms and testing. President Donald Trump said that the site will help people determine whether they need to be tested for COVID-19 and share details of the nearest testing centers.

Amazon: The ecommerce giant announced another 100,000 job openings to facilitate the increase in online orders, with the coronavirus hurting retail. The company plans to add new full-time and part-time employees to meet the rise in demand. The company is also expected to increase wages from around $15 an hour to $17 an hour through April end.

Amazon has also set up a $25 million fund, known as the Amazon Relief Fund, which will allow fulfillment centers and delivery employees to apply for grants of up to two weeks’ pay in case they test positive for coronavirus.

How their shares have performed: Microsoft’s shares have lost around 21% in the past month, while Apple’s stock is down 22%. Shares of Google have plummeted more than 26% in the month, while Amazon’s stock has dropped 15%.

The Markets Today

     

Investors will be keeping an eye on US markets today, with stocks staging a rebound yesterday. The US stock market has seen wild swings lately, amid coronavirus concerns.

Context: US stocks climbed on Tuesday, after the Trump Administration announced some actions to ease the coronavirus impact on the economy. Markets remained highly volatile, with stocks opening higher but quickly moving to the negative zone. The day ended with gains made by the major indices.

Details: After recording the biggest point decline in history, the Dow made a comeback on Tuesday after President Donald Trump, Vice President Mike Pence and Treasury Secretary Steven Mnuchin announced some measures to combat the coronavirus impact on the economy.

Steven Mnuchin announced a whopping $1 trillion in stimulus measures and said that the Trump Administration is planning on sending cheques to American households over the next two weeks to deal with an increase in personal financial expenses during the outbreak. The Treasury Secretary announced plans to keep stock markets open despite the volatility, while suggesting a reduction in trading hours if needed. Mnuchin also postponed the tax filing cut-off date for 2019 by 90 days.

In a surprise move on Sunday, the Federal Reserve cut its benchmark rates to almost zero to curb the slowdown in economic growth. The announcement came even after the Fed had made an emergency rate cut previously in the month.

The Dow jumped more than 1,000 points to settle at 21,237 on Tuesday, while the S&P 500 rose 6% to 2,529. The Nasdaq 100 spiked 6.23% to close at 7,335.

Coronavirus cases in the US have exceeded 6,000, with more than 100 deaths. Globally, the number of infected cases has risen past 198,000 persons and the death toll stands at around 7,900.

In corporate news, shares of Regeneron Pharmaceuticals surged 11% after the pharma company announced plans to begin clinical trials for a potential COVID-19 treatment by early summer.

In economic news, US retail sales dropped 0.5% in February, missing estimates of a 0.2% increase. US business inventories also declined 0.1% in January. However, industrial production rose 0.6% in February.

What to watch: The markets are expected to open in negative territory, with US stock futures pointing towards a lower start this morning. The economic calendar is light today, with investors awaiting reports of housing starts and building permits. Housing starts, which declined by 3.6% to an annualized 1.567 million units in January, are expected to fall to 1.5 million units in February. Building permits are also likely to decline to 1.5 million units in February.

Other Markets: European indices were trading lower at 9:45am GMT, with the FTSE 100, German 30 and French 40 down by 5.07%, 4.77% and 4.71%, respectively.

Support & Resistances
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market snapshot

     

Futures at 0400 (GMT)

News shaping
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What else to watch today

     

South Africa’s retail sales, Canada’s inflation rate, Russia’s producer prices, Brazil’s business confidence and net payrolls, Argentina’s leading economic index as well as the US MBA mortgage applications and crude oil stocks change.