US equities ended higher Monday but coronavirus worries persisted. The Dow industrials gained 0.6 percent and the S&P 500 gained 0.7 percent, and the NASDAQ was up 1.1 percent.
Outperforming were consumer discretionary, real estate, and technology, while energy and commodity-linked shares trailed as oil prices dropped on worries about the coronavirus hitting the Chinese economy.
Among companies in the news, Restaurant Brands International rose 2.7 percent after an earnings beat and raising its dividend after reporting mostly strong sales at its various fast-food units. HP, the computer hardware company, rose 0.8 percent after Xerox raised its takeover bid. Taubman, a big REIT, rocketed by 53 percent on news it would be acquired by Simon Property Group, which gained 1.5 percent.
In US economic news, Philadelphia Fed President Patrick Harker said the US is in good shape and policy should stay on hold. "My own view right now is that we should hold steady for a while and watch how developments and the data unfold before taking any more action," he said.
These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell US$1.22 to US$53.30, while gold rose US$3.00 to US$1,576.90. The US dollar was mixed against major currencies. The US Treasury 30-year bond yield fell 2 basis points to 2.03 percent while the 10-year note yield declined 2 basis points to 1.56 percent.
Risk-off sentiment linked to the coronavirus returned to keep stocks on the defensive Monday, and markets ended mixed. The Europe-wide STOXX 600 managed to edge up 0.1 percent, but both the German DAX and French CAC fell 0.2 percent while the UK FTSE-100 declined 0.3 percent.
Irish stocks dropped, with Bank of Ireland off 8 percent after national election results gave the left-wing Sinn Fein party a strong showing and a likely spot in the next government.
Companies exposed to China were hurt the most, with oil, miners, and other resource stocks off, along with automakers, while defensive plays held up best, including real estate, construction & materials, and health care.
Among companies in focus, NMC Health soared 32 percent on reports of approaches by private equity firms including KKR to acquire the UK health provider. Isra Vision, a German industrial imaging company, jumped 45 percent on reports it may be acquired by Atlas Copco, a Swedish competitor.
Most major Asian markets closed lower Monday, with Chinese shares the main exception. Despite a further increase in coronavirus cases and fatalities over the weekend and ongoing concerns about the outbreak's potential impact on the domestic and global economy, the Shanghai Composite index closed up 0.5 percent on the day after the release of data showing stronger price pressures in January. Moves elsewhere in the region broadly tracked declines on Wall Street Friday, with Japan's Nikkei and Topix indices dropping 0.6 percent and 0.7 percent respectively, and Hong Kong's Hang Seng index losing 0.6 percent. Australia's All Ordinaries index closed down 0.2 percent.
China's headline consumer price index increased 5.4 percent on the year in January, picking up from 4.9 percent in December and above the consensus forecast for 4.9 percent. This is the highest level of headline inflation since October 2011 and likely reflects a number of factors, including stockpiling purchases of food by consumers in response to the coronavirus outbreak, the timing of lunar new year holidays compared with last year, and ongoing disruptions in pork supply. Food prices rose 20.6 percent on the year in January, up from growth of 17.4 percent in December, whereas the year-on-year change in non-food prices remained relatively stable and subdued, picking up from 1.3 percent to 1.6 percent. China's headline producer price index advanced 0.1 percent on the year in January after falling 0.5 percent in December.
The stability in broader price pressures suggests officials will likely discount the significance of the recent spike in food prices and maintain a target for consumer inflation of around 3.0 percent for 2020 when economic targets are set at next month's annual meeting of the National People's Congress. Nevertheless, uncertainty about the potential impact of the coronavirus outbreak remains a major risk to the near-term inflation outlook.
On Tuesday in Asia/Pacific, the Australia home loans report is due. In Europe, UK monthly GDP, GDP, and industrial production figures are due. In North America, Fed Chair Jerome Powell will speak, and US small business optimism and JOLTS reports are scheduled.