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Top 5 Things to Know in the Market on Monday, May 11th

Published 11/05/2020, 08:31 pm
Updated 11/05/2020, 08:55 pm
© Reuters.

© Reuters.

By Geoffrey Smith 

Investing.com -- The White House is suffering a mini-outbreak of Covid-19, which is putting a dampener on the U.S. stock market opening. Central banks from China to Europe talk up the prospect of more stimulus measures, while two Fed speeches will be scanned for hints of support to the idea that interest rates could turn negative next year. Earnings season is winding down, but there are upates from Marriott and Coty (NYSE:COTY), among others. Here's what you need to know in financial markets on Monday, May 11th.

1. Covid-19 in the White House

U.S. Vice-President Mike Pence missed a meeting with President Donald Trump at the weekend but is not in quarantine and will return to the White House on Monday, Bloomberg quoted a spokesman for Pence as saying.

Pence has tested negatively for the virus every day since his press secretary Katie Miller tested positive for the virus last week.

Two other members of the White House task force on Covid-19, headed by Pence, are self-isolating, while Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, is in a “modified” quarantine, according to reports.

The news comes after a valet for President Trump also tested positive for the virus last week.  It comes against a mixed global backdrop: the U.K. said its lockdown measures will be relaxed slightly from Wednesday, while Disney's Shanghai theme park opened its gates again, but infection curves in countries from India to Russia and Brazil continued to rise steeply.

2. China promises more stimulus; car sales rebound

The Chinese central bank promised “more powerful” policies to counter the economic effect of the pandemic, indicating that the pressures on the world’s second-largest economy aren’t easing significantly, despite the anecdotal evidence that points to a gradual return to normal. However, the PBoC didn’t provide much detail of what those policies would be in a quarterly report published on Sunday.

There were strong signs of the authorities pushing liquidity out into the economy via the banking system in April. New loans rose by 1,700 billion yuan, compared to estimates of 1,300 billion, while M2 money supply and total social financing, the broadest measure of credit, also rose faster than expected.

China also posted its first year-on-year increase in auto sales in two years in April, with overall sales rising 5.5%.

3. U.S. stocks set to open lower; Tesla's lawsuit, sales in focus

U.S. stocks are set to open mostly lower on Monday amid unease at the mini-outbreak of the coronavirus in the West Wing, an uncomfortable reminder of the persistent risk of infection as the U.S.  economy reopens.

By 6:30 AM ET, the Dow Jones 30 Futures contract was down 144 points, or 0.6%, while the S&P 500 futures contract was down 0.6% and the Nasdaq 100 contract was down 0.3%.

One stock likely to be in focus on Monday is Tesla (NASDAQ:TSLA), which is suing Alameda County in California for permission to reopen its only U.S. production plant in Fremont. Founder and CEO Elon Musk threatened over the weekend to relocate the plant to Texas, a move that would likely involve a costly if temporary disruption to production. Separately, Tesla also saw its Model 3 sales fall 64% in China in April.

4. Earnings season rolls on.

Earnings season is winding down but there are still a number of notable reports due in the course of the day.

Payments company Worldpay (NYSE:WP) and cell carrier Sprint Corp (NYSE:S) all report before the opening, along with hotel group Marriott, generic drug specialist Mylan, sports gear maker Under Armour and Coty.

IFF reports after the closing bell, along with mall owner Simon Property (NYSE:SPG) and Tencent Music Entertainment.   

5. Fed speakers in focus amid negative rate speculation

With speculation on U.S. interest rates turning negative next year, there’ll perhaps be more attention than usual to two appearances from senior Federal Reserve policy-makers in the course of the day.

Atlanta Fed President Raphael Bostic is due to speak at 12 PM ET, while his Chicago counterpart Charles Evans will speak half an hour later. Their interventions come ahead of an eagerly-anticipated appearance by Fed Chairman Jerome Powell on Wednesday.

In addition to the PBoC, two members of the European Central Bank’s governing council – German board member Isabel Schnabel and Bank of France Governor Francois Villeroy de Galhau – both talked up the possibility of further monetary stimulus over the weekend.

(CORRECTION: the original version of this article incorrectly reported that Alibaba (NYSE:BABA)'s earnings were due on Monday. According to Nasdaq, they are due on May 20.)

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