Archives of “January 24, 2020” day

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European shares rebound to end the week

  
Analysis, Global Indices
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German Dax up 1.3%.  France’s CAC, up 0.8%.  UK’s FTSE 100, +1.1%

The major European indices are ending the day higher.  For the week all but the German Dax fell.
A look at the provisional closes are showing:
  • German DAX, +1.3%
  • France’s CAC, +0.8%
  • UK’s FTSE 100, +1.1%
  • Spain’s Ibex, +0.4%
  • Italy’s FTSE MIB +1.0%

For the week, all but the German Dax are ending lower.  Provisional changes are showing

  • German DAX +0.32%
  • France’s CAC -1.34%
  • UK’s FTSE 100 -1.1%
  • Spain’s Ibex -1.3%
  • Italy’s FTSE MIB -0.82%
In other markets as the European/London traders look to exit:
  • Spot gold is trading up $9.80 or 0.64% at $1572.90
  • WTI crude oil futures are trading down $1.43 or -2.57% at $54.16
US stocks have tilted back to the downside as a US Sen. tells of the 3rd case of the coronavirus in the US.  Weekend fear is being elevated:
  • S&P index -15.78 points or -0.46% at 3309.78
  • NASDAQ index -24.97 points or -0.26% at 9377.62
  • Dow -87 points or -0.29% at 29073.83

Gold rises to the highest since January 8

  
Analysis, Gold / Silver

Back to pre-Iran attack levels

Gold is catching a safe-haven bid in a quick rally to $1574 from $1559 at the start of US trading.
The market is divided at the moment. There is a big cohort of people who continue to buy dips in stocks while a second cohort is bidding up safe assets as a hedge or a trade.
I see it as a battle between coronavirus alarmists and optimists. My guess is that it gets worse before it gets better.
Back to pre-Iran attack levels

Eurozone January flash manufacturing PMI 47.8 vs 46.8 expected

  
Analysis, Economy

Latest data released by Markit – 24 January 2020

  • Prior 46.3
  • Services PMI 52.2 vs 52.8 expected
  • Prior 52.8
  • Composite PMI 50.9 vs 51.2 expected
  • Prior 50.9
Despite some green shoots observed in the manufacturing sector – as exemplified by Germany earlier – overall economic conditions remain tepid in the euro area. The services sector showed a decline and the composite reading stayed flat compared to December.
The fact that manufacturing conditions continue to sit in contraction territory isn’t too helpful as well. In short, while there are some suggestions of things getting better, it still isn’t enough to point towards a more solid recovery for the time being.
EUR/USD is still keeping weaker around 1.1045 currently, failing to take heart in the more upbeat German readings earlier.

Are Asian stocks due further falls post Lunar New year? Probably, yes.

  
  Analysis
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Coronavirus has a fear factor

According to a quick google search around 50,000+ people die from the flu each year. It is mainly the old or the already unwell who are most susceptible to the virus. In 2003 the total number of SARS death was 700+ from a total sample of 8000+ cases. Here is a quote from the World Health Organisation on a person’s chances of dieing from SARS during the outbreak if they caught the disease.

The likelihood of dying from SARS in a given area has been shown to depend on the profile of the cases, including the age group most affected and the presence of underlying disease. Based on data received by WHO to date, the case fatality ratio is estimated to be less than 1% in persons aged 24 years or younger, 6% in persons aged 25 to 44 years, 15% in persons aged 45 to 64 years, and greater than 50% in persons aged 65 years and older

So far, 17 people have died due to the Coronavirus and this is a concern. The total number of coronavirus cases is rising all the time and the fear factor alone should weigh on equity markets. People will not want to travel around if they can avoid it as the disease spreads. I was surprised that on January 22 the Asian markets closed higher, even though the case load doubled. The Jan 23 response made much more sense to me in the Asian markets as they fell sharply lower ahead of the Chinese New Year Holidays. Sadly, it now seems almost inevitable that we will have a sharp increase in cases over this travelling time.
Triple top in Nikkei 
Coronavirus has a fear factor

A triple top in the Nikkei makes an attractive level for shorts if and when the coronavirus fear factor takes hold. Furthermore, it is still too early for folks to fully grasp the implications of the disease and unknowns remain.

Eurostoxx futures +0.7% in early European trading

  
Analysis, Global Indices

European futures playing catch up to the late gains in Wall Street overnight

  • German DAX futures +0.8%
  • French CAC 40 futures +0.6%
  • UK FTSE futures +0.7%
Just be mindful that the more solid gains we’re seeing in European futures at the moment are more related to the late recovery in Wall Street during overnight trading.
European equities ended in the red yesterday amid concerns surrounding the new coronavirus outbreak and failed to partake in the late surge in US equities. As such, we’re seeing a bit of catch up play at the moment ahead of the cash equity market open.
The overall risk mood is actually more steady with bond yields mildly higher and US futures also near flat levels on the day still at the moment. That is also reflected in USD/JPY which is keeping around 109.50-55 as we begin the session.
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