By Geoffrey Smith
Investing.com -- Stimulus packages in the U.S. and Europe hang in the balance, AstraZeneca (NYSE:AZN) updates on the development of its hotly-touted Covid-19 drug, and crude oil prices fall on indications of a hit to Chinese demand. Walt Disney (NYSE:DIS) quietly joins the Facebook (NASDAQ:FB) advertising boycott, while Chevron (NYSE:CVX) is poised to buy Noble Energy (NASDAQ:NBL). Here's what you need to know in financial markets on Monday, July 20th.
1. Fights over the next round of stimulus
The week starts with two economic stimulus packages in focus. Congressional Republicans are due to meet with President Donald Trump to discuss the terms of what would be the fifth U.S. stimulus package, 11 days before a raft of earlier measures are due to expire.
“The economy is probably not ready for the abrupt withdrawal of money that that implies,” Paul Donovan, chief economist with UBS Global Wealth Management, said in a morning briefing.
Meanwhile in Europe, an EU summit that aimed to approve the 750 billion euro ($860 billion) recovery fund has dragged on to a fourth day, amid resistance from five northern European states to the idea of 500 billion euros in grants to poorer countries. Reports suggest the proportion of grants could be whittled down to as little as 390 billion euros, leaving a greater part to be made up by conditional loans that would take longer to approve and disburse. Talks are set to resume at 10 AM ET (1400 GMT)
The euro still rose 0.3% to $1.1454 by 6:30 AM ET (1030 GMT), close to a four-month high.
2. AstraZeneca/Oxford University to update on drug progress
AstraZeneca (NYSE:AZN) is due to release the results of clinical trials for its experimental Covid-19 drug, being developed in partnership with Oxford University in England.
AZ’s drug was touted by Business Week last week as being the front-runner of all the various candidate vaccines being developed by the world’s pharma industry. Early-stage test results had suggested that the drug killed not only the virus, but also the cells infected by it, strengthening the body’s immune response.
Elsewhere, Dutch medical technology company Philips stock rose 4.8% to its highest since January after posting a surge in sales of and orders for its ventilators, while a U.K. small-cap Synairgen more than tripled after reporting positive early-stage results for a protein-based Covid treatment.
3. Stocks set to open lower; IBM 's, Halliburton's earnings eyed
U.S. stock markets are poised to open mostly lower against the backdrop of more negative headlines over the weekend about the spread of the coronavirus. Florida posted its fifth straight day of over 10,000 new cases on Sunday, while the mayor of Los Angeles said that the city was "on the brink" of imposing fresh restrictions to try to slow down the virus' spread.
President Trump, meanwhile, told Fox News that the country is dealing with the 'dying embers' of the epidemic, although he acknowledged that Florida was still 'a flame'.
By 6:30 AM ET (1030 GMT), the Dow futures contract was down 55 points or 0.2%, while the S&P 500 futures contract was down 0.3% and the Nasdaq 100 futures contract was essentially unchanged.
Earnings season continues with updates from oil and gas services company Halliburton (NYSE:HAL) before the opening, and with International Business Machines (NYSE:IBM) after the closing bell.
4. Disney joins Facebook boycott (sort of)
Walt Disney (NYSE:DIS) has – sort of – joined the advertising boycott of Facebook (NASDAQ:FB) over its perceived failure to tackle hate speech on its social media platforms, according to The Wall Street Journal.
Disney, which was Facebook’s biggest advertiser in the first half of the year with a total ad spend of some $210 million, hasn’t made any public decision about its advertising policy, but the number of ads for its new streaming service Disney+ on Facebook’s main platform has nearly dried up, the WSJ said.
In addition, the company has also paused advertising for its Hulu service on Facebook’s Instagram platform.
5. Oil weakens on Chinese news; Chevron goes bargain-hunting
Crude oil prices started the week on a weak note on reports that Chinese refiners will reduce throughput in response to a drop in local demand due to heavy flooding.
U.S. crude futures fell 0.9% to $40.41 a barrel, while the international benchmark Brent was down 0.8% at $42.78 a barrel.
The pressure of low prices was also evident as Noble Energy (NASDAQ:NBL), whose shares have more than halved this year, agreed to be bought by Chevron (NYSE:CVX) for just under $5 billion in an all-stock deal. Chevron stock was down 1.3% in premarket trade, while Noble (NYSE:NE)'s was up 9.9%.
Elsewhere, reports said that Saudi Arabia’s King Salman and the Emir of Kuwait were both hospitalized with Covid-19.