- Global equities plunged on Friday
- Oil prices went down over 7%
- Strong labor data from US and Canada
Corona virus still has the largest impact on the markets. The number of confirmed cases worldwide raised above 100,000 today. The countries most affected by the epidemic are China, South Korea, Iran and Italy. There have also been concerns that a possible coronavirus drug may be too expensive. According to some analysts, the drug developed by Gilead Sciences (GILD.US) may cost from $50 to $100 dollars per person. For comparison, the cost of a regular flu vaccine ranges from $11.67 to $18.19 dollars, which is approximately seven times less. If the price estimates are correct, funds that individual governments and financial institutions have allocated to fight the epidemic could be highly inadequate. It all depends on the rate at which the virus will spread. However, if it reaches the stage of a pandemic and it will be necessary to treat many people at the same time, then funds may be lacking.
Oil prices fell over 7% on Friday after Russia announced that will not agree to deeper production cuts to offset a slump in demand caused by the coronavirus outbreak. Russia’s representatives only agreed to extend the existing cuts. Contracts for Brent crude oil plunged below $46 a barrel, its lowest level in three years.
Data from the US and Canadian labor market surprised on the upside. Total NFP figure rose by 273,000 in February, and the unemployment rate fell slightly to 3.5%. Average hourly earnings came in line with expectations 0.3%. The most significant increase in employment was recorded in the following sectors: health care and social assistance, food services and drinking places, government, construction, professional and technical services, and financial activities.
In Canada, employment change rise by 30.3k in February which exceeded market expectations of 10k.
Despite this positive news, all major stock indices plunged on Friday, extending the losses from the previous session, as the fast-spreading coronavirus disrupts global supply chains and causes further damage to the global economy. As a result European indices declined over 3% on average. Pessimism is also visible in the US stock markets which are currently losing 2.4% on average. Investor sentiment has turned to the gold market, the price of which has tested recent highs from February.
No important macroeconomic data will be released on Monday, therefore financial markets will pay attention to coronavirus updates.
The price of USD/CAD currency pair is still trading within range between 1.3313 and 1.3463 which is limiting its movements. Only a permanent break out of from the consolidation zone could lead to bigger price action. Until then traders should expect some sideways movement. Source:xStation5
