Oil Drops To Its Lowest Level In 3 Months As Coronavirus Spreads

Plus, Johnson & Johnson’s chief scientific officer said he believes the company can develop a vaccine for the deadly virus within the next couple of months, and GM announced it’s investing $3 billion on the production of electric vehicles.

Stocks tumbled Monday morning with the Dow dropping 406 points, or 1.4%. The S&P 500 also traded 1.4% lower, while the Nasdaq plunged 1.8%.

The number of confirmed cases of the coronavirus surged to nearly 2,900 in China this weekend, with the death toll rising to 81. The U.S. now has five confirmed cases. “China is the biggest driver of global growth so this couldn’t have started in a worse place,” said FTSE Russell managing director of global markets research, Alec Young. “This is now a sell first, ask questions later situation. Markets hate uncertainty, and the coronavirus is the ultimate uncertainty in that no one knows how badly it will impact the global economy.” The World Health Organization director general, Dr. Tedros Adhanom Ghebreyesus, is arriving in Beijing today to meet with Chinese government and health officials. WHO declined in two emergency meetings last week to label the virus a global health emergency saying that more data needed to be collected. There are now confirmed cases in 10 countries, in addition to China.

Oil has dropped to its lowest level in three months as fears around a possible slow in crude demand from the outbreak of the coronavirus puts pressure on prices. West Texas Intermediate Crude is currently down 2.62% to $52.72 a barrel, while Brent Crude is down 2.85% to $58.94. “Supply risk has been tested in acute fashion over recent months, but the coronavirus presents the first major severe test to demand in years,” said RBC analyst Michael Tran in a note. “Concerns surrounding the virus and the negative impact on demand have taken the oil market hostage and have sent oil prices on a five-day losing streak.”

Shares of several vaccine and diagnostics companies, as well as manufacturers of medical supplies, like masks, are rallying this morning as concern grows around the coronavirus. Co-Diagnostics Inc shares are up 53%, NanoViricides Inc has gained 57%, Allied Healthcare Products is up 31%, and Inovio Pharmaceuticals Inc is up 23%. Johnson & Johnson’s chief scientific officer, Dr. Paul Stoffels, said this morning that he’s confident the drugmaker can develop a vaccine in the coming months to fight the virus, though he cautioned that it could take up to a year to bring it to market. “We have dozens of scientists working on this so we’re pretty confident we can get something made that will work and stay active for the longer term,” Stoffels said. “We are going to take an approach with at least five different constructs and different partners and collaborations all over the world in order to see which part of the virus we can use to make an effective vaccine and develop a model that we can invest in.”

Over the weekend, an explosive leak to the New York Times from former National Security Advisor John Bolton’s unpublished book said that President Donald Trump planned to freeze aid to Ukraine until its government opened investigations into his political rival Joe Biden and his son Hunter. The revelation fortifies central arguments made by Democrats in the impeachment trial, that the president used the power of his office for political gain, and strengthens the case for witnesses to be called in the ongoing trial. Trump denied telling Bolton the aid was frozen until investigations by Ukraine were underway and accused the former National Security Advisor of just trying “to sell a book.” However, Republican Senator Susan Collins said in a statement Monday that the new revelations from Bolton “strengthen the case for witnesses” in the impeachment trial, and said that the revelations “have prompted a number of conversations among my colleagues” about voting to call witnesses, which Senate republicans have so far refused to do in the trial against President Trump.

General Motors announced this morning that it plans to invest $3 billion in the production of “a variety” of electric trucks and SUVs, as well as its Cruise Origin autonomous vehicle. “We are truly building the future today,” said GM President Mark Reuss. According to the automaker, production of its first all-electric truck will begin in 2021, and production of its Cruise Origin—which was unveiled at an event last week—will follow “soon” thereafter. The company will invest $2.2 billion in its Detroit-Hamtramck plant, its first plant specifically devoted to the production of electric vehicles, and said that the plant will create more than 2,200 jobs once it is fully operational.

Stocks We’re Watching

Gran Colombia Gold (OTC: TPRFF): Gran Colombia Gold announced today that it has landed a private placement of up to 7,142,858 shares of the company at CA$5.60 per share for a total haul of CA$40 million. “We see the increased interest from strategic and institutional investors in Gran Columbia as a continuing endorsement of our successful turnaround of the Company and the potential for further appreciation in our share price, which doubled in 2019 and is up by almost 300% over the past three years, as we execute our strategy to unlock value in our portfolio of quality assets,” said Gran Colombia executive chairman Serafino Iacono. “We have ramped up our near-mine and regional exploration programs at our high-grade Segovia Operations for the coming year and we are unlocking value in our Marmato Project through the spin out to Caldas Gold Corp., which we anticipate will be completed within the next couple of weeks.”

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