By Geoffrey Smith
Investing.com -- The number of Covid-19 cases worldwide rose for the first time in eight weeks last week as the World Health Organization said people are “letting down their guard.” China’s top regulator sends a chill through local markets by warning about bubbles, and Target and Ross Stores lead a bunch of retail earnings. Oil is taking a breather but off lows after data showing that Russian production fell last month. Here’s what you need to know in financial markets on Tuesday, March 2nd.
1. Covid-19 cases rose for first time in eight weeks last week
The pandemic is back. Or rather, its end looks like being delayed a little more, after the World Health Organization warned that the number of global cases rose for the first time in seven weeks last week.
Reported cases increased in four of the WHO’s six regions - the Americas, Europe, south-east Asia and the eastern Mediterranean – due to the relaxation of public health measures, the spread of new mutations and, according to WHO head Tedros Adhanom Ghebreyesus, “people letting down their guard.”
The numbers come at a time when U.S. states and cities are slowly lifting restrictions on economic and social life as the national vaccination campaign gathers speed, helped by the approval of Johnson & Johnson (NYSE: JNJ )’s Covid-19 vaccine at the weekend.
Europe’s largest economy Germany is also reportedly planning to reopen non-essential shops in areas with low infection rates, loosening a lockdown that has been in place since December,. Most restrictions will stay in place through March 28 however. Elsewhere, President Emmanuel Macron says France needs another 4-6 weeks before loosening its stance.
2. Retail earnings in focus
Expectations are high for Target, which already reported a 17% rise in sales over the November and December period, thanks to its flexibility in adopting curbside collection and other pandemic-beating tactics.
Overnight, MercadoLibre (NASDAQ: MELI ) finally published its quarterly results after repeated delays, reporting a surprise loss of over a dollar a share, rather than the 16c profit expected. The Latin American e-commerce site has one of the most stretched valuations of all after a stellar rally last year. Its stock was down 2.5% in premarket.
3. Stocks set to open with small correction lower
U.S. stocks are set to open slightly lower, giving up only some of the gains made in an explosive rally on Monday that was driven by the approval of J&J’s vaccine and the passage of the stimulus bill through the House of Representatives.
Stocks likely to be in focus later include Zoom Video, which published surprisingly strong earnings after the close on Monday and forecast that it will transform from being a “killer app” into an Internet platform company. The shares had fallen nearly 40% in three months after peaking in October, but have recovered over 25% since then. They rose 8.6% in premarket trading.
4. China’s regulator warns of bubble
China’s top banking regulator warned that he was concerned by the risk of bubbles – in foreign markets. He also admitted that the Chinese housing sector was also looking stretched.
Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission and Party secretary, said that European and U.S. markets were heading in the opposite direction from their underlying economies and were due for a correction.
His comments triggered a sell-off in Chinese markets , as analysts interpreted them as a way of warning about domestic conditions without explicitly criticizing the authorities who had let them develop. Analysts at Saxo Bank point out that Chinese equities currently trade at a record premium to their world peers, having traded at a discount for much of the last 10 years.
5. Oil off lows after Russian, OPEC data; API stockpile data due
Crude oil prices dipped – along with those of other commodities – in what still appears to be a correction from over-extended levels after sharp gains in recent weeks.
By 6:35 AM ET, U.S. crude prices were down 0.1% while Brent futures were down 0.3%. Both contracts bounced after data showing that production from both OPEC and Russia fell in February, the former due to Saudi Arabia’s publicly-announced 1 million b/d output cut, and the latter due to an extended cold snap. The figures come ahead of Thursday’s monthly review of their output policy.
Elsewhere, The Wall Street Journal reported that the American Petroleum Institute is about to endorse the principle of pricing carbon dioxide emissions, dropping its long-held opposition.
The API will also release its weekly oil inventory data at 4:30 PM ET.
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