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Due to the severe imbalance in supply and demand caused by declining global demand for oil, the price of West Texas Crude Oil (WTI) futures in May fell to its lowest level since 2008 on Monday (20), except that today is the last day of the exchange position. Concerned about the impact of the epidemic on the demand for crude oil, it has caused a further drop in oil prices.
As investor unease mounted, US stocks opened on Monday (20) and ended last week’s gains. The top four indices fell. Chevron (CVX-US) and Exxon Mobil (XOM-US) fell more than 5% at the open, dragging the Dow down more than 400 points, and energy stocks in the S&P 500 index fell more than 6%.
New outbreak of coronary pneumonia
The cumulative number of confirmed cases in the United States has exceeded 750,000, but New York Governor Andrew Cuomo said the number of the last single-day deaths in the state has dropped to 507, and believes that the New York State’s epidemic has peaked and is positive. It is on a downward trend.
Furthermore, due to the original $ 349 billion from the United States government in funds for SME aid loans, it has been depleted after just two weeks. Therefore, the United States Democratic Party and the Trump administration held talks on Sunday (19) to plan to provide more aid loans to SMEs, and are now close to reaching an agreement.
WTI oil prices plummet
Although OPEC + has recently reached an agreement with other oil-producing countries and promised to reduce production by 9.7 million barrels per day from May, it is still insufficient to offset the decline in global oil demand. Also, due to concerns about the storage facility in Cushing, Oklahoma. The price of WTI crude oil in the United States in recent months is significantly lower than the price of forward contracts, and the positive price difference between May and June futures contracts are as high as $ 10, a record since 2008.
Starting at 10 p.m. on Monday (20) Taipei time:
- The Dow Jones index fell 474.00 points or -1.96%, temporarily reporting 23768.49 points
- Nasdaq fell 71.65 points or -0.83%, temporarily reported 8578.50 points
- S&P 500 fell 42.38 points or -1.47%, temporarily reported at 2832.18 points
- The fees and a half fell by 26.20 points or -1.54%, temporarily reported at 1680.52 points
- TSMC ADR fell 0.91% to $ 53.18 per share
- The performance of the US Treasury. USA At 10 years it fell to 0.616%
- New York light crude fell 11.11% to $ 22.25 a barrel
- Brent crude fell 6.05% to US $ 26.38 per barrel
- Gold fell 0.10% to $ 1,697.10 per ounce
- The US dollar index rose 0.22% to 100,052 points
Focus actions:
Alibaba (BABA-USA)
Alibaba rose 0.10% in early trading to hit $ 209.75.
Alibaba Group plans to invest 200 billion yuan ($ 28 billion) in cloud infrastructure such as data centers in the next three years. Alibaba plans to expand one of this fastest growing business to more countries.
The revenue of the cloud computing department grew 62% in the fourth quarter of last year, reaching 10.7 billion yuan. Alibaba confiscated the cloud computing services of the American store giant Amazon (AMZN-US) and the technology giant Microsoft (MSFT-US). Global leader position, and the company has also been recognized as one of the leading cloud service providers in Asia.
DuPont (DD-US)
DuPont rose 0.36% in early trading to hit $ 38.51.
DuPont released preliminary data for the first quarter of fiscal year 2020 on Monday (20.) The company estimates that first quarter earnings per share will be in the range of $ 0.82 to $ 0.84, which is higher than the US $ 0.68 estimated by Wall Street analysts. In addition, DuPont estimates that first quarter revenue will be $ 5.2 billion, which is also higher than the market estimate of $ 5 billion.
Additionally, the company’s current debt is approximately $ 16 billion, and analysts estimate that the full-year EBITDA for 2020 will be $ 5.8 billion. DuPont’s share price has fallen 40% since this year, which is higher than 15% for the Dow Jones Index and 11% for the S&P 500 Index.
Disney (DIS-US)
Disney fell 2.77% in the first operations to US $ 103.66.
Disney will stop paying 100,000 employees on Monday (20). The scope of influence includes employees in the theme park and hotel business departments. The company is estimated to reduce the company’s expenses by $ 500 million each month.
In addition, UBS analyst John Hodulik downgraded Disney’s stock rating from “Buy” to “Neutral” on Monday (20) and lowered the price target from $ 162 per share to $ 114. In addition, Hodulik estimates that the Disney’s earnings per share for fiscal year 2020 and 2021 will be $ 1.60 and $ 2.13, which are less than previously estimated at $ 3.08 and $ 5.87, respectively.
Key economic data for today:
- United States March Chicago Fed National Activity Index -4.19, estimated -0.62, previous value 0.16
Wall Street Analysis:
Although US stocks showed a rebound trend from a low last week, Citigroup Chief Investment Officer David Bailin said that if the United States has a second wave of infections after gradually lifting the blockade measures, it will lead to a further economic deterioration. Furthermore, prior to the development and popularization of the pneumonia vaccine, the pneumonia epidemic is expected to continue to plague the world for 18 to 24 months, and the stock market has yet to reflect these two risk factors.
SEB commodities analyst Bjarne Schieldrop said that from the current trend in crude oil futures prices, it can be seen that the market is facing a serious problem of insufficient space for oil storage. The world economy and oil demand are expected to hit the bottom in April 2020.
But in the second half of the year, Schieldrop said that with the sharp pickup in oil demand, crude stocks are expected to shrink rapidly, and the problem of insufficient oil storage space will also go away.
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