Panic-driven selling on global stock markets
Coronavirus spreads beyond China
A strong demand for safe havens
Monday brought us crucial coronavirus updates which, as it turned out, have tremendous impact on global financial markets. Over the weekend the outbreak has spread rapidly beyond China. According to WHO, there have been almost 79 thousand cases worldwide including almost 2,500 deaths. The pace of the outbreak seems especially sharp in South Korea (over 800 cases) as well as in Italy (more than 200 cases). A few Italian towns are now on lockdown as coronavirus fears have started spreading in Europe. The outlook for the Middle East does not seem promising as well as there have been 61 cases including 12 deaths in Iran. In addition to that, first cases have been reported in Iraq and Afghanistan. On the other hand, various factories in China managed to reopen today - sources indicate that the majority of steel enterprises and coal mines did return to work despite the virus crisis.
Investors from around the world were afraid about the market opening as coronavirus fears escalated over the weekend. Asian indices were first to fall - KOSPI plunged as much as 3.87%, S&P/ASX 200 finished 2.25% lower and HSCEI dropped 2.06%. The pessimistic sentiment then spread to Europe where declines were also significant (at least 3%). The biggest panic-driven selling was seen in Italy where FTSE MIB plunged 5.43%. As a matter of fact, today’s European session was the worst one since June 2016 and rapid fall on Brexit vote. American stocks are performing slightly better than European equities but declines are still serious (roughly 3%).
As risk assets come under pressure amid virus turmoil, safe havens tend to gain on popularity. Strong demand for gold still pushes its price higher, as a result gold is now trading at around $1,673,00 (+1.81%). The coronavirus outbreak is now certainly the main factor behind the gold surge. Silver prices are soaring as well (+1.79%).
Although the economic calendar was rather poor today, we got to know the latest Ifo Business Climate from Germany. The reading was stronger than expected and stood at 96.1 in February 2020 (est. 95.3). The EUR/USD volatility is very little, though. The currency pair is now trading at around 1.0862 (+0.14%).
Tomorrow investors should certainly pay attention to German GDP release (07:00 am GMT). Apart from that, the CB Consumer Confidence from the U.S. will be published. Most definitely everybody should also keep track of coronavirus updates, especially from Europe, Middle East and South Korea as these places now seem particularly endangered.
DE30 had its worst session since August 2019. The crucial resistance level now stands at 12 950 points. Source: xStation5
The content of this report has been created by X-Trade Brokers Dom Maklerski S.A., with its registered office in Warsaw, at Ogrodowa 58, 00-876 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. X-Trade Brokers Dom Maklerski S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.