Daily summary: Virus concerns overshadow positive data

6:13 PM 24 January 2020

  • PMI indices point to some manufacturing recovery
  • Virus spreads quickly, scares markets
  • Oil prices keep diving as demand concerns mount

Friday started fairly well on the markets. China and Korea had no sessions as they started New Year celebrations so virus concerns were not that loud on the markets and a solid PMI recovery in Japan delivered positive surprise. More of such surprises took place in Europe where both Germany and UK saw a clear improvement in activity. While the US manufacturing and French services indices slid, overall picture in January is clearly positive and suggests that the global economy is catching a breath. We suspect this recovery will be fairly limited as the main source here is digesting through the inventory glut and not a surge in global demand (despite a round of easing in 2019). Still this is a positive change after months of disappointments.

Equity markets reacted positively to the data but the optimism has been contained due to the enws of virus spread literally everywhere across the globe. There are new detections across whole Asia (including India) and in the US. This is already affecting not only the Chinese companies as McDonald’s informed about closing restaurants in 5 Chinese cities. However, markets are not yet in the panic mode – US500 and DE30 are still just shy off their all-time highs.

This cannot be said of oil market where prices are crashing. Both OIL and OIL.WTI are down more than $10/b since the reaction to the Soleimani death just 2 weeks ago as investors are concerned that the virus will hit activity, especially tourism. These concerns are pushing gold prices higher today.  

This is moving fast! OIL prices are not that far from the $56.50 support zone. Source: xStation5

The macro data seems to be supportive for the euro and the pound in general especially as the US PMIs were mixed but the opposite took place. EURUSD and GBPUSD are both down, EURUSD is at the lowest level in nearly 2 months.

The next week will be pretty important for stocks as 14 Dow Jones companies release quarterly earnings. All those 14 reports might be dwarfed by the Tesla report on Wednesday as the stock meteoric rise has turned many heads recently. We will be issuing special report ahead of this event on Tuesday.

 

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.

Share:
Back