Daily summary: Panic sell-off on global financial markets

8:01 PM February 28, 2020

  • Coronavirus in roughly 50 countries

  • Equities and commodities plunge on coronavirus fears

  • Global markets heading for its worst week since October 2008

 

This day as well as the whole week was dominated by the panic sell-off on global financial markets. Coronavirus fears now seem to be spreading all over the world. More than 83 thousand people in roughly 50 countries have been infected - with 1 case in Brazil, coronavirus has now reached every continent (apart from Antarctica). Amid rapid outbreak beyond China, more and more companies report demand squeeze as a potential reason for lower profits as well as supply chains disruptions.

 

Asian equities dropped roughly 3% today and European stocks tumbled even more - one could observe declines ranging from 4 to 6%. US stock markets are now trading around 2% lower as the panic sell-off has reached every stock exchange today. As a matter of fact global markets are heading for its worst week since October 2008 and the global financial crisis.

 

Apart from the terrible performance of global stocks, commodities are plunging as well. Gold spot price broke below $1,600.00 level (the most intraday plunge since July 2013)  and silver prices are trading lower as much as 5,70%. Oil prices are plummeting too, WTI reached $44 a barrel. On the other hand Brent fell to $50 a barrel for the first time since December 2018. EUR/USD is trading around 1.10 level (at this very moment below the threshold). 

 

As far as economic data is concerned, we have had a busy schedule today. The industrial production in Japan unexpectedly grew 0.8% MoM (est. 0.2%) and retail sales fell only 0.4% (est. -1.1%). Moving to Europe, French economy shrank 0.1 percent QoQ which was in line with estimates. Canadian GDP showed figures which turned out to be better than expectations - the Canadian economy grew 0.3 in December (MoM). The result is still rather disappointing as the economy advanced only 0.1 percent on quarter - the weakest rate since Q2 2016. Chicago PMI reading surprised investors as it went up to 49 points in February 2020 (est. 45.9) compared with 42.9 points in the previous month.

 

The next week may be crucial for the outlook of the global stock markets. Financial markets now seem to depend on coronavirus updates - without doubt the virus will impact the global economy. The question remains whether we will be able to hold the outbreak back or quite the opposite. In terms of economic data, one should pay attention to NFP and ISM reports from the U.S. next week. OPEC meeting in Vienna may be crucial for the oil prices bearing in mind the potential supply cuts. Investors might also be interested in RBA’s and BoC’s rate decisions. 

Even though gold is regarded as a safe haven, its prices are plunging today. Gold spot price managed to break below $1,600.00 amid a rapid sell-off on financial markets. Source: xStation5

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