Daily summary: Coronavirus officially called a pandemic, unexpected rate cut by BoE

• Coronavirus officially called a pandemic

• Unexpected rate cut by BoE

• Global equities keep plunging

The outlook for the global financial markets has not shifted yet. Quite the opposite - the economic prospects for the world tend to get worse day by day. Even though the coronavirus now seems to be under control in China, the outbreak is particularly fierce in Europe. That is why the WHO officially called the virus spread a pandemic today.

Today’s European session was rather weak, one cannot find a stock market with solid gains. DAX fell 0.35% and other major indices finished with declines as well. The pessimism is more vivid in the U.S. as the American equities are falling roughly 4%. The drop got even worse after the WHO’s statement. 

The economic calendar brought us some crucial macro data but the main event of the day came unexpectedly. The Bank of England decided to cut the key interest rate by 50ps to 0.25% in the morning. A move that is supposed to help the economy amid coronavirus crisis, was not expected by the markets. The FTSE 100 opened higher as a response to the news, yet it did not manage to maintain the early gains and finished 1.40% lower. The sterling failed to strengthen as well.

Apart from that, the UK published its recent GDP figures. The British economy turned out to stagnate in the three months to January. It is the third successive three-month period when GDP is at 0.0%. On the other hand, the manufacturing production in the UK was in line with expectations as it rose 0.2% in January. Apart from that, the recent EIA’s report suggested a sharp increase in oil inventories held by U.S. firms. Inventories jumped by 7.7 million barrels last week (est. 2.105 million). Still, oil prices did not seem to react to these figures as oil prices slump is generally caused by the oil markets turmoil and coronavirus outbreak. 

Tomorrow investors should primarily focus on the ECB’s interest rate decision (12:45 pm GMT). The European Central Bank now seems to be under pressure following a series of rate cuts around the world. One may also be interested in industrial production figures from the eurozone.

Following an unexpected rate cut by BoE, the sterling failed to strengthen. The key support can be found at 1.2850. The  Source: xStation5