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Coronavirus fears rise again - the number of cases outside China climbs
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Disappointing PMI reading from the U.S.
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Gold prices keep surging amid financial markets turmoil
Today’s session was definitely unsuccessful for global stock markets. In Asia stock indices fell (apart from Shanghai Composite) with KOSPI dropping as much as 1.49%. Negative sentiment dominated the European equities as well with many indices soaring more than 1%. The American session does not seem to perform any better - currently major US indices are plummeting roughly 1%.
The major reason for that may be rising coronavirus fears as suddenly the number of cases outside China climbed considerably. The situation seems particularly serious in South Korea where there have been more than 200 cases now (the number of infections doubled in 24 hours). Singapore and Japan are facing coronavirus outbreak as well with almost 100 cases in each of these countries - it has sparked renewed concerns among investors. As of Friday there have been more than 76 thousand cases with over 2,200 deaths worldwide.
EUR/USD is rebounding today amid surprisingly positive data from Europe and rather poor reports from the U.S. In the morning we got to know German PMI, which as a matter of fact, was slightly better than expected. German Manufacturing PMI stood at 47.8 (est. 44.8) while German Composite PMI reached 51.1 (est. 50.8). Only German Services PMI underperformed as it showed 53.3 points (est. 53.8). Moreover, PMIs figures from the eurozone and the UK may be regarded as optimistic as in most of the cases they beat the estimates.
On the other hand, investors may be disappointed with the latest PMI reading from the U.S as it showed a significant decrease compared with market forecasts. The Manufacturing PMI equaled 50.8 (est. 51.5). The figure still indicates expansion, but the slowdown is already visible (previous 51.9). Both Markit Composite PMI (49.6) and Services PMI (49.4) fell below key 50 points level. Markit Composite figures are actually the worst since 2013. Moreover, Services PMI reading is far worse than forecasts (est. 53.0). As a result, the euro is trading higher today (now roughly 1.0856).
As gold is commonly regarded as a safe haven, gold prices are currently surging amid stock markets falling. This week gold spot price managed to break above $1,600.00 level and bulls are still pushing the price higher. The price of the yellow metal managed to hit a 7-year high yesterday and further gains are still possible.
Next week will bring us some crucial macro data updates as well as inflation readings. Germany, the US and Canada will publish its GDP data. On the other hand, Friday will be a big day for the EUR/USD as inflation data from Europe and the United States will be released. Obviously one should pay attention to coronavirus updates too as it seems to have a huge impact on stock markets right now.
The price of the yellow metal managed to hit a 7-year high yesterday and further gains are still possible. Source: xStation5
