Stocks shrug off Wuhan virus worries as focus turns to Apple and Starbucks earnings
- US and European stocks pull away from losses as investors keep an eye on an earnings-heavy day stateside.
- Apple, Starbucks, and eBay report earnings later in the day.
- The Dow Jones Industrial Average turned lower on virus risk fears on Monday, going negative for 2020.
- Oil continues to trade lower, but has pared some of Monday's losses.
- The Wuhan virus has infected more than 2,700 people and killed 80.
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Major stocks pulled away from sharp losses on Tuesday as investors take stock of the impact of coronavirus on world economy and look ahead to an earnings-heavy week stateside.
European stocks recovered slightly with the pan-European Stoxx 600 trading 0.3% higher. Meanwhile, Dow futures were up 0.3% in pre-market after the Dow Jones Industrial Average Index hit its worst session in over three months.
Investors are turn their focus to a big day of earnings with the likes of Apple, Starbucks, and eBay reporting later in the day.
"The Dow Jones nosedived into its biggest daily drop in four months, going negative for the year. You would expect some let-up after such a big move lower and indeed futures are indicating a higher open," Jasper Lawler, head of research at London Capital Group said in a note on Tuesday morning.
"Whether we've seen an end to the correction already or today is a dead-cat bounce might hinge on fourth-quarter earnings from Apple this evening," Lawler added.
The Wuhan virus has infected more than 2,700 people and killed 80. The virus spread from Wuhan in China to a number of other Asian countries, making its way to US, Canada, France and Australia. China has taken emergency measures to deal with the crisis that involves restricting movements and locking down a number of cities in order to stop the spread of the disease.
Asian stocks continue to suffer. The S&P ASX, Australia's Benchmark Index closed 1.26% lower and Japan's Nikkei down 0.85%. Stock markets in China and Hong Kong remained closed due to Chinese New Year.
Sectors across the board such as tourism, airline and luxury stocks were pulled down as a result of the spread of the virus. Investors rushed to safe-haven assets such as gold and government bonds pushing gold prices on Monday to a three-week high.
Crude oil prices, that were down more than 2% on Monday, continued to struggle, however recovering slightly. On Tuesday morning, Brent traded nearly 1.5% lower at $58 a barrel. Meanwhile, West Texas Intermediate (WTI) was down 0.8%, trading at $52 a barrel.
According to Reuters, Barclays said on Tuesday that oil prices could see an impact of $2 a barrel driven by the economic fallout from the virus outbreak. Barclays, Reuters reported, sees a Brent and WTI trading at $62 per barrel and $57 per barrel respectively.
"If air passenger traffic in China declined by half in the first-quarter of 2020, it would likely lead to 300,000 barrels per year on year decline in jet-kerosene demand from China," Barclays said in its note on Tuesday.
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