China trade data lift Asian markets, but earnings could squelch optimism.
Asian markets rose on Tuesday after China reported a smaller-than-expected hit to trade, though investors remained nervous heading into what could be a rough corporate earnings season.
Japan led a broad rise in stock markets across the Asia-Pacific region, shrugging off a glum Monday on Wall Street. Futures markets were predicting a positive opening later on Tuesday for shares in Europe and the United States as well.
Stocks were helped by better-than-expected trade data for March from Chinese customs officials. Exports fell by less than had been expected compared with a year earlier, while imports rose, suggesting Chinese factories may be buying raw materials as they try to resume production. But the optimism may not linger, as China’s reopening could be a long and painful process, worsened by slumping demand for its goods in countries dealing with the coronavirus outbreak.
Investors could also be tested by a slew of corporate earnings results set to come out beginning this week for the first three months of the year, as China and then other countries battled the global outbreak. FactSet, a data provider, estimated the profits for the companies that comprise the S&P 500 stock index could fall by one-tenth during the quarter compared with a year ago, the biggest decline in more than a decade.
For now, investors appeared to be looking on the bright side. Prices for U.S. Treasury bonds, often seen as a safe place to park money, fell in Asia trading. Oil prices rose in futures markets.
At midday, Japan’s Nikkei 225 index was up 2.2 percent. In Hong Kong, the Hang Seng index was up 0.6 percent. The Shanghai Composite index in mainland China rose 0.7 percent. South Korea’s Kospi was up 1.5 percent.
Big layoffs in the oil industry are unavoidable.
The remarkable agreement by major oil producers on Sunday to reduce their daily production by 9.7 million barrels staved off a collapse of the industry.
But it will not be enough to solve the energy industry’s bigger problem: Customers are not buying.
Demand for oil has tumbled in recent weeks as an untold numbers of commutes, plane trips and cargo shipments have been eliminated.
Experts estimate that demand has fallen by somewhere between 25 million barrels and 35 million barrels a day — or up to three and a half times as much as what the oil nations are promising to cut.
Kirk Edwards, chief executive of Latigo Petroleum, a Texas producer, predicted that 40,000 workers would be laid off in the West Texas Permian Basin alone. “There is no reason to drill or complete any more wells this year because there is nowhere to take the production,” he said.
As food workers get sick, localized shortages could occur.
The spread of the virus through the food and grocery industry is expected to cause disruptions in production and distribution of certain products as panicked shoppers test supply networks as never before.
Industry leaders acknowledge shortages could increase, but they insist it is more of an inconvenience than a major problem. People will have enough to eat; they just may not have the usual variety. The food supply remains robust, they say, with hundreds of millions of pounds of meat in cold storage.
“You might not get what you want when you want it,” said Christine McCracken, a meat industry analyst at Rabobank in New York. “Consumers like to have a lot of different choices, and the reality is in the short term, we just don’t have the labor to make that happen.”
Several meat manufacturers have had to shut down after outbreaks. Smithfield Foods on Sunday shut down a plant that produces about 5 percent of the country’s pork after the plant saw hundreds of coronavirus cases.
The food-processing industry is uniquely vulnerable to an outbreak. Employees often work shoulder to shoulder, and many companies have granted sick leave only to employees who test positive for the coronavirus. That potentially leaves on the job thousands of other infected workers who haven’t been tested, hastening the infection’s spread.
“Labor is going to be the biggest thing that can break,” said Karan Girotra, a supply-chain expert at Cornell University. “If large numbers of people start getting sick in rural America, all bets are off.”
At the other end of the supply chain, grocery stores are also dealing with increasing illnesses among workers, as well as absences by those afraid to go in to work.
Workers are concerned about new C.D.C. guidelines that loosen quarantine rules.
Laborers who were once considered unskilled are now “essential employees,” even heroes to some, because they are providing the nation with food and other crucial supplies. How employers and public health officials protect these workers has become a critical issue.
New guidelines from the Centers for Disease Control and Prevention state that essential workers who may have been exposed to the coronavirus may continue to work provided they are asymptomatic, wear a mask at all times for 14 days after their last exposure and have their temperature taken before entering the workplace.
Labor advocates like Marcy Goldstein-Gelb, the co-executive director of the National Council for Occupational Safety and Health, say the new guidelines may encourage employers to pressure workers to return to their jobs too soon, often without adequate protection or pay.
“It’s a complete reversal of the policy that the C.D.C. has for the public,” Ms. Goldstein-Gelb said. “It disregards the fact that, right now, workers are dying every day needlessly in unconscionable numbers.”
Nearly 3,000 workers of the 1.3 million people represented by the United Food and Commercial Workers International Union have been directly affected by the virus as of Monday — whether through infection, quarantine, hospitalizations and those awaiting test results — and 30 had died, according to the union’s research.
Grocery stores are among the remaining high-risk transmission points for the disease now that many other commercial businesses have been closed, but many workers and customers do not have masks and people can remain in close contact with one another. Workers are imploring customers to take more care while in stores. They say many have been throwing used gloves and wipes in carts and on floors for employees to pick up. Many customers are still browsing with their hands and not their eyes and blaming workers for lack of goods on shelves.
Reporting was contributed by David Gelles, Clifford Krauss, Peter Eavis, Matt Phillips, Carlos Tejada and Daniel Victor.