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Concerns About Coronavirus Death Toll May Weigh On Wall Street

The major U.S. index futures are pointing to a sharply lower open on Wednesday, with stocks likely to see further downside after coming under pressure over the course of the previous session.

Renewed coronavirus concerns may weigh on the markets after White House officials warned of nearly a quarter million deaths from the pandemic.

During a White House press conference on Tuesday, President Donald Trump warned the U.S. is facing a "very, very painful two weeks."

White House officials are now projecting between 100,000 and 240,000 deaths in the U.S. as a result of the outbreak, which Trump previously sought to downplay.

"This could be a hell of a bad two weeks. This is going to be a very bad two, and maybe three weeks. This is going to be three weeks like we've never seen before," Trump said.

The comments from the White House come as data from Johns Hopkins University shows there are nearly 190,000 confirmed coronavirus cases in the U.S. and more than 4,000 deaths.

On the U.S. economic front, payroll processor ADP released a report showing a modest decrease in private sector employment in the U.S. in March, although the data does not reflect the full impact of the coronavirus-induced shutdown.

Stocks recovered from initial weakness but moved back to the downside over the course of the trading session on Tuesday. With the drop on the day, the Dow and the S&P 500 had their worst first quarter performances ever, plunging by 23.2 percent and 20 percent, respectively.

The major averages all finished the session firmly in negative territory. The Dow plunged 410.32 points or 1.8 percent to 21,917.16, the Nasdaq slumped 74.05 points or 1 percent to 7,700.10 and the S&P 500 tumbled 42.06 points or 1.6 percent to 2,584.59.

The afternoon pullback on Wall Street may have reflected lingering concerns about the economic impact of the coronavirus pandemic, as New York Governor Andrew Cuomo said confirmed cases in his state jumped to more than 75,000 overnight.

Earlier in the day, traders reacted positively to separate reports on consumer confidence and Chicago-area business activity, which showed deteriorations in March but still came in well above economist estimates.

A report from the Conference Board showed its consumer confidence index slumped to 120.0 in March from an upwardly revised 132.6 in February.

However, economists had expected the consumer confidence index to tumble to 110.0 from the 130.7 originally reported for the previous month.

MNI Indicators released a separate report showing its Chicago business barometer fell to 47.8 in March from 49.0 in February, with a reading below 50 indicating a contraction in regional business activity.

The Chicago business barometer remained below 50 for the ninth straight month but showed a relatively modest decrease compared to economist estimates for a slump to 40.0.

The better than expected data offset some of the concerns about the economic impact of the ongoing coronavirus pandemic.

A report showing an unexpected expansion in Chinese manufacturing activity in the month of March also helped to alleviate the worries.

The latest survey from the National Bureau of Statistics showed China's purchasing managers index jumped to 52.0 in March from 35.7 in February, with a reading above 50 indicting an expansion.

Economists had expected the index to climb to 45.0, although a reading below 50 would have indicated a continued contraction in Chinese manufacturing activity.

Positive sentiment was also generated in reaction to Dr. Anthony Fauci telling CNN he is starting to see "glimmers" that social distancing is helping to stop the spread of the coronavirus in the U.S.

Interest-rate sensitive stocks turned in some of the market's worst performances on the day, with utilities stocks showing a substantial move to the downside.

Reflecting the weakness in the sector, the Dow Jones Utility Average tumbled by 3.7 percent after moving sharply higher over the five previous sessions.

Banking, housing, and commercial real estate stocks also saw considerable weakness as treasury yields moved higher after trending lower in recent days.

Gold stocks also showed a significant move to the downside amid a steep drop by the price of the precious metal.

Semiconductor, chemical and networking stocks also came under pressure, while notable strength remained visible among energy stocks as the price of crude oil bounced off its lowest closing level in eighteen years.

Commodity, Currency Markets

Crude oil futures are slipping $0.23 to $20.25 a barrel after rising $0.39 to $20.48 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,598.70, up $2.10 compared to the previous session's close of $1,596.60. On Tuesday, gold plunged $46.60.

On the currency front, the U.S. dollar is trading at 107.42 yen compared to the 107.54 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0925 compared to yesterday's $1.1031.

Asia

Asian stocks ended mostly lower on Wednesday after the Trump administration warned that the coronavirus pandemic could kill as many as 250,000 Americans and that the next two weeks will be "very painful."

In economic news, China's Caixin PMI indicated a slight expansion in manufacturing, while Japan's big manufacturers turned pessimistic for the first time in more than seven years, separate reports showed.

Chinese shares ended lower as the National Health Commission reported 36 new cases of coronavirus infection for the mainland, with all but one from people arriving from abroad.

The benchmark Shanghai Composite Index dropped 15.77 points, or 0.6 percent, to 2,734.52, while Hong Kong's Hang Seng Index tumbled 517.69 points, or 2.2 percent, to 23,085.79.

Chinese manufacturers reported broadly stable business conditions in March after deteriorating the most on record in February due to the strict measures taken to stem the spread of coronavirus. According to the survey conducted by IHS Markit, the manufacturing Purchasing Managers' Index rose to 50.1 in March from 40.3 in February.

Japanese stocks plunged after a measure of sentiment among Japan's large manufacturers plunged in January-March, marking the fifth straight quarter of declines and the longest downturn since the financial crisis in 2008.

Large manufacturing in Japan weakened again in the first quarter of 2020, the Bank of Japan's quarterly Tankan Survey on business sentiment showed with a diffusion index score of -8 because of the global Covid-19 pandemic.

Separately, the latest survey from Jibun Bank revealed that the manufacturing sector in Japan contracted at a faster rate in March with a manufacturing PMI score of 44.8, down from 47.8 in February.

The Nikkei 225 Index plummeted over 1,000 points at one point before recovering some lost ground to end the session down 851.60 points, or 4.5 percent, at 18,065.41. The broader Topix closed 3.7 percent lower at 1,351.08.

Nisshin Seifun Group, Nippon Sheet Glass, Nippon Suisan Kaisha and ANA Holdings gave up 7-9 percent.

Meanwhile, Australian stocks posted strong gains, with energy companies leading the surge after crude oil prices rose almost 2 percent overnight. The benchmark S&P/ASX 200 Index rallied 181.80 points, or 3.6 percent, to 5,258.60, while the broader All Ordinaries Index surged up 180.10 points, or 3.5 percent, to 5,290.70.

Woodside Petroleum soared 7.9 percent, Santos surged 9.7 percent and Oil Search jumped 12.6 percent. Miners BHP, Fortescue Metals Group and Rio Tinto rose 4-5 percent, while banks Westpac, NAB and Commonwealth gained 1-3 percent.

In economic news, the total number of building permits issued in Australia rose a seasonally adjusted 19.9 percent sequentially in February - beating forecasts for an increase of 3.0 percent following the 15.3 percent decline in January. On a yearly basis, total approvals fell 5.8 percent.

A measure of Australian manufacturing activity climbed back into expansion in March, with a seasonally adjusted Performance of Manufacturing Index score of 53.7, up sharply from 44.3 in February.

The minutes of the Reserve Bank of Australia's monetary policy meeting revealed that the central bank believes the country will undergo a very material contraction over the first half of the year.

Seoul stocks sank amid an extended sell-off by foreign investors on fears over the worsening economic outlook. The Kospi ended a choppy session down 69.18 points, or 3.9 percent, at 1,685.46.

Market bellwether Samsung Electronics plunged 4.1 percent and No. 2 chipmaker SK Hynix plummeted 5.9 percent.

The manufacturing sector in South Korea continued to contract in March, and at a faster rate, the latest survey from IHS Markit revealed with a PMI score of 44.2, down from 48.7 in February.

Europe

European stocks have fallen sharply on Wednesday as reports of rising numbers of coronavirus cases deepened the gloom over the likely impact on the world economy.

The U.S. recorded a big daily jump of 26,000 new cases, bringing the total to more than 189,000. The death toll there leaped to over 4,000, with officials predicting the disease could kill between 100,000 and 240,000 Americans.

U.N. Secretary-General Antonio Guterres warned Tuesday that the world faces the most challenging crisis since World War II, threatening a lengthy global recession that probably has no parallel in the recent past.

While the U.K.'s FTSE 100 Index has plunged by 3.8 percent, the German DAX Index and the French CAC 40 Index are down by 4.2 percent and 4.4 percent, respectively.

Banks HSBC, Santander and Lloyds Bank have all shown notable moves to the downside after suspending dividends.

Adidas has also come under pressure. The sportswear maker said it would stop a 1 billion euro share buyback it had planned for this year, because of economic uncertainty caused by the dynamic developments related to the coronavirus outbreak.

Contracting firm Bilfinger has also moved sharply lower on the day after suspending its 2020 guidance. Continental AG is also posting a steep loss after decided to withdraw its outlook for fiscal 2020.

Commodities miner Glencore has also tumbled. The company deferred a decision on its dividend payout for this year, warning of material disruption to production.

Residential developer Taylor Wimpey has also slumped. The company announced a pay cut to Executive Directors to conserve cash due to the coronavirus or Covid-19 crisis.

In economic news, Eurozone manufacturing activity contracted at the fastest pace in more than seven years in March as the coronavirus outbreak weighed on orders, output, employment and confidence, final data from IHS Markit showed.

The final factory Purchasing Managers' Index fell to 44.5 from 49.2 in February. The reading was also below the flash estimate of 44.8.

U.K. manufacturing activity also contracted in March due to the outbreak of the coronavirus and subsequent mitigation efforts, final survey data from IHS Markit showed.

The Chartered Institute of Procurement & Supply factory Purchasing Managers' Index fell to 47.8 in March from 51.7 in February. The flash estimate was 48.0.

U.S. Economic Reports

Reflecting a significant loss of jobs at small businesses, payroll processor ADP released a report on Wednesday showing a modest decrease in private sector employment in the U.S. in the month of March.

ADP said private sector employment fell by 27,000 jobs in March after jumping by a downwardly revised 179,000 jobs in February.

Economists had expected private sector employment to plunge by 150,000 jobs compared to the addition of 183,000 jobs originally reported for the previous month.

The drop was much smaller than expected but still reflects the first decrease in private sector employment since September of 2017.

ADP also noted its national employment report, or NER, only utilizes data through the 12th of the month, which is the same period the Labor Department uses for its more closely watched monthly jobs report.

"As such, the March NER does not fully reflect the most recent impact of COVID-19 on the employment situation, including unemployment claims reported on March 26, 2020," said Ahu Yildirmaz, co-head of the ADP Research Institute.

At 10 am ET, the Institute for Supply Management is scheduled to release its report on manufacturing activity in the month of March.

The ISM's purchasing managers index is expected to slump to 45.0 in March after edging down to 50.1 in February, with a reading below 50 indicating a contraction in manufacturing activity.

The Commerce Department is also due to release its report on construction spending in the month of February at 10 am ET. Construction spending is expected to climb by 0.6 percent.

At 10:30 am ET, the Energy Information Administration is scheduled to release its report on oil inventories in the week ended March 27th.

Crude oil inventories are expected to jump by 4.0 million barrels after climbing by 1.6 million barrels in the previous week.

Stocks In Focus

Shares of BlackBerry (BB) are moving sharply lower in pre-market trading after the software company reported a fiscal fourth quarter net loss on weaker than expected revenues. BlackBerry's adjusted earnings beat estimates.

Paysign (PAYS) is also seeing substantial pre-market weakness after once again postponing its year-end 2019 earnings results call to allow additional time to complete its year-end closing procedures.

Shares of Macy's (M) may also come under pressure on news the department store chain will be removed from the S&P 500 effective prior to the open of trading on Monday, April 6.

On the other hand, shares of British America Tobacco (BTI) may move to the upside after the cigarette maker said its U.S. biotechnology subsidiary is working on a potential coronavirus vaccine derived from tobacco leaves.

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