Dow Futures Surge as Investors Shrug Off Coronavirus Concerns


After a massive bloodbath last week, the markets are showing signs of recovery as indexes turn positive. Dow Futures are surging. But China’s Manufacturing Index for February has scored below market expectations.

Last week, the rising cases of coronavirus globally pushed the traditional stock markets in a bloodbath. All indices – Dow Jones, S&P 500, and Nasdaq – corrected around 10%. This was the fastest correction witnessed by the market since the global economic recession of 2008.

However, after the crash on Sunday, Dow Futures recovered in the early trading session on Monday. At Monday’s opening session, the Dow Jones Industrial Average futures opened 144 points up. Similarly, the Nasdaq 100 and S&P 500 futures surged on Monday, giving a positive signal to the market.

Last week’s market crash was the outcome of a sharp increase in the coronavirus cases outside China. Health officials of South Korea, Italy, and even the U.S. raised concerns about the virus outbreak indicating a pandemic. Besides, the number of cases also increased over the weekend.

So far, the coronavirus has taken over 2900 deaths and over 85,000 infected cases worldwide. Last weekend, Australia, Thailand, and the U.S. reported their first deaths due to coronavirus. On the other hand, England has reported 12 additional cases taking the total number of infected cases to 35. Similarly, China has also reported over 500 infected cases last Saturday.

Chetan Ahya, global head of economics at Morgan Stanley, wrote a note to his investors saying:

“The outbreak of Covid-19 has certainly changed the near-term narrative. It is an untimely shock, considering that the starting point of global growth was weak, and the recovery was very nascent.”

China’s Manufacturing Index Plunges, Economic Outlook Seems Fragile same as Dow Futures

The world is already witnessing how severely the coronavirus pandemic has affected global markets in a short span of time. China released its manufacturing data showing a sharp plunge in the index. The Markit/Caixin manufacturing Purchasing Managers’ Index (PMI) scored 40.3, much below the estimates of 45.7. The PMI figure was at 51.1 in the last month of January.

Last Saturday, the National Bureau of Statistics released data showing that the PMI made a low of 35.7 in February. Analysts in the Reuters poll expected the figure to come at 46.0 but it has plunged 10% above this. The PMI score of February is nearly 20% below its score of January. Richard Yetsenga, the chief economist at Australia and New Zealand Banking Group, said:

“China’s February manufacturing PMI at 35.7 is comparable to the sort of outcomes seen during the financial crisis. While businesses are restarting operations in China, the vast majority are operating well below capacity, and many restrictions on the movement of people remain”.

Despite this poor manufacturing data, the Shanghai composite index was 2.9% higher on Monday while the Shenzhen composite gained 3.415%. Other Asian markets like Japan’s Nikkei recovered marginally by 1.24% while South Korea’s KOSPI gained 1.04%.

Speaking to CNBC, OCBC’s Vasu Menon said that the recovery was the outcome of a “case of bad news being good news”.

“Markets are saying that you know the bad news, the fallout in the markets might lead policymakers to launch stimulus and stimulus is seen as good news for the markets at least for the short-term,” added he.

The biggest bank in Brazil Itau Unibanco has introduced Bitcoin and..

Chainlink, Dogwifhat, and Rebel Satoshi (RBLZ) Are 3 Cryptos Turn Your..

CMT Digital, known for its deep interest in the blockchain ecosystem..

ads-image ads-image