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Traders May Continue To Shrug Off Coronavirus Concerns

The major U.S. index futures are currently pointing to a higher open on Tuesday, with stocks likely to see further upside after turning higher over the course of the previous session.

Stocks are poised to reach new record highs as traders continue to shrug off concerns about the economic impact of the deadly coronavirus outbreak.

Several companies have already warned about the impact of the virus, but traders seem confident the U.S. economy is strong enough to withstand the negative effects.

Traders are still likely to keep an eye on Federal Reserve Chairman Jerome Powell's testimony before the House Financial Services Committee later this morning.

In prepared remarks, Powell noted some of the uncertainties around trade have diminished following the signing of the phase one U.S.-China trade deal but noted risks to the outlook remain.

"In particular, we are closely monitoring the emergence of the coronavirus, which could lead to disruptions in China that spill over to the rest of the global economy," Powell said.

Powell pointed out that the U.S. economy has recently appeared resilient to global headwinds, with economic activity increasing at a moderate pace over the second half of last year.

Stocks recovered from an initial drop and moved mostly higher over the course of the trading session on Monday. With the turnaround on the day, the Nasdaq and the S&P 500 ended the session at new record closing highs.

The major averages saw further upside going into the close, ending the session at their best levels of the day. The Dow climbed 174.31 points or 0.6 percent to 29,276.82, the Nasdaq jumped 107.88 points or 1.1 percent to 9,628.39 and the S&P 500 advanced 24.38 points or 0.7 percent to 3,352.09.

The strength that emerged on Wall Street came as traders returned to ignoring concerns about the economic impact of the deadly coronavirus outbreak.

The Chinese government revealed Sunday night that a total of 40,171 cases of coronavirus have been confirmed, with 908 people dying from the disease.

World Health Organization Director-General Tedros Adhanom Ghebreyesus also voiced concerns about the virus being spread from people with no travel history to China, saying, "We may only be seeing the tip of the iceberg."

Nonetheless, traders seemed reassured by Chinese President Xi Jinping's pledge to win the fight against the coronavirus outbreak.

Jinping said in remarks on state television that China will speed up the development of drugs aimed at treating the deadly pneumonia-like virus.

Meanwhile, some traders stuck to the sidelines ahead of the release of closely watched reports on consumer prices, retail sales and industrial production later this week.

Software stocks showed a substantial move to the upside over the course of the session, driving the Dow Jones U.S. Software Index up by 2 percent to a new record closing high.

Significant strength was also visible among tobacco stocks, as reflected by the 2.2 percent jump by the NYSE Arca Tobacco Index. The index rebounded after ending the previous session at a nearly four-month closing low.

Semiconductor, gold, and biotechnology stocks also saw considerable strength on the day, while a decrease by the price of crude oil weighed on energy stocks.

Reflecting the weakness in the energy sector, the NYSE Arca Natural Gas Index and the Philadelphia Oil Service Index both tumbled by 1.8 percent.

Commodity, Currency Markets

Crude oil futures are climbing $0.92 to $50.49 a barrel after sliding $0.75 to $49.57 a barrel on Monday. Meanwhile, after climbing $6.10 to $1,579.50 an ounce in the previous session, gold futures are slipping $2.70 to $1,576.80 an ounce.

On the currency front, the U.S. dollar is unchanged compared to the 109.77 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.0901 compared to yesterday's $1.0911.

Asia

Asian stocks moved higher on Tuesday even as confirmed cases of the Wuhan coronavirus continued to rise. Investors seemed reassured by Chinese President Xi Jinping's pledge to win the fight against the coronavirus outbreak. Markets in Japan were closed in observance of National Day.

China's Shanghai Composite Index rose 11.19 points, or 0.4 percent, to 2,901.67 amid bets that Chinese policy makers will likely roll out more measures to minimize the fallout from the coronavirus outbreak. Hong Kong's Hang Seng Index jumped 342.54 point, or 1.3 percent, to 27,583.88.

Australian markets rose notably after the S&P 500 and the Nasdaq closed at record highs overnight, boosted by Amazon.com, Microsoft and Alphabet.

The benchmark S&P/ASX 200 Index climbed 42.80 points, or 0.6 percent, to 7,055.30, led by financial and industrial companies. The broader All Ordinaries Index rose by 43.40 points, or 0.6 percent, to 7,151.40.

Information technology stocks advanced, with Xero and Afterpay ending up more than 2 percent. Gold miner Northern Star Resources edged up slightly to extend gains for the fourth straight session on strong half-yearly results.

The big four banks rose between half a percent and 0.7 percent. Woodside Petroleum, Santos and Oil Search gained between 0.7 percent and 1.2 percent as oil prices rose more than 1 percent in Asian trading in sympathy with a rally in equity markets. Beach Energy tumbled 2.5 percent on weak first-half results.

Mining heavyweights BHP and Rio Tinto eked out modest gains, while smaller rival Fortescue Metals Group climbed 2.4 percent.

Challenger soared nearly 14 percent. After reporting a 3 percent increase in profit before tax for the first half of the year, the investment management company said it expects full-year profit at the top end of its guidance range.

Transurban Group gained 1.4 percent. The toll road operator reported a 46 percent surge in its statutory net profit for the first half of the year and said it will pay a higher interim distribution compared to the year-ago period.

Meanwhile, Cochlear lost 3.4 percent after the hearing implants maker lowered its earnings guidance, citing the adverse impact of the coronavirus on sales.

Insurance giant Suncorp Group fell 1.3 percent after its net profit from continuing operations for the first half of the year declined 7 percent, reflecting a surge in bushfire and hailstorm claims.

Seoul stocks posted strong gains to snap a two-day losing streak as investors found comfort from strength in the world's largest economy.

The benchmark Kospi jumped 22.05 points, or 1 percent, to close at 2,223.12. Top automaker Hyundai Motor surged 1.9 percent and its smaller affiliate Kia Motors advanced 1.7 percent.

Europe

European stocks advanced on Tuesday as investors seemed reassured by Chinese President Xi Jinping's pledge to win the fight against the coronavirus outbreak.

A record close on Wall Street overnight on the back of robust earnings and signs of strength in the world's largest economy as well as an apparent slowdown in the rate of coronavirus infection in mainland China also helped underpin investor sentiment.

In economic news, the British economy failed to grow in the final three months of last year, as political uncertainty took its toll on businesses, official data showed.

According to preliminary estimates, GDP was unchanged in the fourth quarter when compared to the prior three months.

While the French CAC 40 Index has risen by 0.4 percent, the U.K.'s FTSE 100 Index is up by 0.7 percent and the German DAX Index is up by 0.9 percent.

Mining giant Anglo American and Glencore have moved to the upside on the day on the back of an uptick in commodity prices.

Oil & gas major BP Plc and Royal Dutch Shell have also moved higher as oil prices bounced back from a one-year low.

Travel and tourism company TUI Group has soared after its first quarter loss narrowed from last year. Aker BP has also risen after its fourth quarter core earnings topped forecasts.

JD Sports Fashion has also advanced. The sportswear retail group has provided an update following the U.K. Competition and Markets Authority's announcement that it has competition concerns regarding the company's acquisition of Footasylum Limited.

Meanwhile, Marks & Spencer Group shares have fallen. The retailer said Eoin Tonge would be joining the Board in June as Chief Financial Officer. David Surdeau, interim CFO, will remain with the business to support the transition.

ams AG has also slumped. The Austrian sensor manufacturer said that it plans to implement a domination and profit and loss transfer agreement between its wholly-owned subsidiary ams Offer GmbH and Osram Licht AG in the context of its acquisition of OSRAM.

U.S. Economic Reports

Federal Reserve Chairman Jerome Powell is scheduled to testify before the House Financial Services Committee beginning at 10 am ET.

At 12:15 pm ET, Fed Vice Chairman for Supervision Randal Quarles is due to deliver a speech on bank supervision at Yale Law School in New Haven, Connecticut.

The Treasury Department is scheduled to announce the results of its auction of $38 billion worth of three-year notes at 1 pm ET.

At 1:30 pm ET, St. Louis Fed President James Bullard is due to give a presentation on the economic outlook at the CFA Society of St. Louis Luncheon in St. Louis, Missouri.

Minneapolis Fed President Neel Kashkari is scheduled to speak at a town hall meeting in Kalispell, Montana, at 2:15 pm ET.

Stocks In Focus

Shares of Sprint (S) are soaring in pre-market trading amid news T-Mobile (TMUS) has won court approval for its $26.5 billion takeover of the telecom company.

Toy maker Hasbro (HAS) is also likely to see initial strength after reporting fourth quarter earnings that came in well above analyst estimates.

On the other hand, shares of Under Armour (UAA) are likely to come under pressure after athletic apparel maker reported an unexpected fourth quarter loss and warned the coronavirus outbreak could hurt its full-year results.

Golf equipment maker Callaway Golf (ELY) may also move to the downside after reporting a wider than expected fourth quarter loss.

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