U.S. stocks futures pared gains, and contracts on the S&P 500 at least briefly turned negative, after Group of Seven policymakers released a statement with few specific details about their efforts to address the coronavirus outbreak.
Earlier, investors had anticipated that the rare conference call Tuesday morning between the G7 officials would produce a coordinated global response to the outbreak comprising both fiscal and monetary policy actions. Over the past few days, several officials had hinted at a comprehensive response to support the world economy.
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8:41 a.m. ET: G7 response ‘raises the risk that central banks will disappoint markets’ expectations in the months ahead,’ analyst says
The G7 statement after finance ministers’ conference call this morning extinguished investor hopes for swift monetary and fiscal policy action. It could suggest further disappointments are down the line, according to Jennifer McKeown, head of global economic service at Capital Economics.
Here’s what she had to say about the statement:
The G7 statement falls short of hopes of a coordinated policy response and raises the risk that central banks will disappoint markets’ expectations in the months ahead. The statement that G7 countries are committed to “use all appropriate policy tools to achieve strong, sustainable growth and safeguard against downside risks” and that central banks will “continue to fulfil their mandates, thus supporting price stability and economic growth while maintaining the resilience of the financial system” adds little to what we had already heard from national central banks and governments. This is a disappointment compared to previous hopes of an immediate and coordinated fiscal package and interest rate cuts, although such hopes had already been dampened by information leaked from “G7 officials” early this morning.
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7:47 a.m. ET: Stocks futures pare gains after G7 policymakers release statement
Following a conference call Tuesday morning, G7 finance ministers and central bank policymakers said Tuesday they were “ready to take actions, including fiscal measures where appropriate, to aid in the response to the virus and support the economy” amid the coronavirus outbreak, according to a statement.
Stock futures immediately pared gains after the statement, which provided no specific actions the officials were set to take in the face of the mounting outbreak. Contracts on the S&P 500, which had been higher earlier in the overnight session, turned slightly negative as of 7:47 a.m. ET.
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7:39 a.m. ET: Target’s guidance misses expectations, overshadowing 4Q earnings beat
Big-box retailer Target (TGT) posted better than expected fourth-quarter earnings results, but its outlook for the full-year disappointed Wall Street’s expectations. Shares fell 1.5% in early trading.
Target delivered fourth-quarter adjusted earnings per share (EPS) of $1.69, or three cents ahead of consensus, according to Bloomberg data. Same-store sales grew 1.5% in the quarter, matching expectations. Revenue of $23.40 billion was slightly short of expectations for $23.44 billion.
Target said it expected full-year adjusted EPS of between $6.70 and $7.00, below expectations for $6.94.
In light of the mixed report, the company touted its digital sales growth, which increased 29% in 2019. This was the sixth straight year that digital sales grew by more than 25%, and came along with overall comparable sales growth of 3.4% for the year.
"With eleven consecutive quarters of positive comparable sales growth, driven by healthy performance in both our stores and digital channels, Target's results demonstrate that we've built a sustainable business model that drives strong topline growth and consistent bottom line performance," Brian Cornell, chairman and CEO of Target, said in a statement.
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7:18 a.m. ET: Stock futures rise, adding to Monday’s record gains
U.S. stock futures were higher Tuesday morning, adding to major advances Monday that had sent the Dow up by its largest one-session point advance in history.
Hopes for a coordinated global response to the coronavirus helped buoy risk assets, sending the Dow more than 100 points higher in early trading. G7 policymakers are expected to release a statement sometime after their conference call Tuesday morning eastern.
The call comes shortly after Bank of England Governor Mark Carney – who will attend the call – said Tuesday that finance chiefs were creating a “powerful and timely” response to support the world economy in the face of the coronavirus outbreak, which would likely include both fiscal and monetary policy measures. And on Monday, France’s Finance Minister Bruno Le Maire asserted G7 leaders would seek “concerted action” in the matter.
The U.S. Federal Reserve on Friday had also issued a release on the coronavirus last Friday, saying the central bank would “use [its] tools and act as appropriate to support the economy” as the outbreak spreads. Fed Chair Jerome Powell is also set to attend the call, along with U.S. Treasury Secretary Steven Mnuchin.
Here were the main moves during the pre-market session, as of 7:18 a.m. ET:
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S&P 500 futures (ES=F): 3,077.75, up 12.75 points or 0.42%
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Dow futures (YM=F): 26,651.00, up 183 points or 0.68%
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Nasdaq futures (NQ=F): 8,855.25, up 64 points or 0.73%
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Crude oil (CL=F): $48.14 per barrel, up $1.39 or 1.39%
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Gold (GC=F): $1,604.40 per ounce, up $9.60 or 0.60%
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