An ugly day in the European markets. Big declines across the board coronavirus spread.

German DAX down 4%.

The European markets are now closed and it was an ugly one today. The major indices all fell sharply as global fear about the spread of the coronavirus takes solid hold on growth prospects.  If anything, the uncertainty about the spread is worrying investors.

The provisional closes are showing
  • German DAX fell -4.0%. The low reached -4.4%
  • France’s CAC fell -4.1%. The low reached -4.39%
  • UK’s FTSE 100 fell -3.5%. The low reached -3.91%
  • Spain’s Ibex fell -4.0%.  The low reached -4.32%
  • Italy’s FTSE MIB fell -5.5%. The low reached -6.13%
In the European debt market, the benchmark 10 year yields are mostly lower with the exception of the Italian yield as investors flee the risk from that market.
German DAX down 4%.
In other markets as European/London traders look to exit:
  • spot gold is up $30.68 or 1.087% at 1673.94
  • WTI crude oil futures is getting crushed and is trading down $-2.57 or -4.81% at $50.81
In the US stock market, the major indices are down sharply but off session lows
  • S&P index -100 points or -3.01% at 3237.30. The low reached 3231.52
  • NASDAQ index -3.43 points or -3.59% at 9232.33. The low price reached 9166.00
  • Dow is down -915 points or -3.16% at 28077. The low reached 27995.37

US Treasury 10-year yields fall below 1.40% as risk aversion ramps up

10-year yields are down by nearly 8 bps on the day now


10-year Treasury yields have already broken the low from last year and now the 2016 low at 1.318% looks set to be on sight. Meanwhile, 30-year yields are hitting fresh record lows at 1.848% to start the European morning as the risk-off mood ramps up.
In the currencies space, USD/JPY is easing slightly to just under 111.50 for now as the likes of the aussie and kiwi stay pressured on the day.
Meanwhile, the greenback is extending gains against the pound and loonie with cable down to 1.2918 while USD/CAD is up to 1.3288 currently.

China decides to postpone annual NPC meeting

It has now been made official

Chinese lawmakers have decided to postpone the National People’s Congress, usually scheduled for early March, due to the recent coronavirus outbreak situation. No new date has been scheduled at this stage, according to state media.

For some context, this is usually the meeting where the lawmakers will set out economic goals for the year. So, it looks like we may not get any real specifics from China as they continue to weigh up the impact of the virus outbreak in the country.

China issues warning against travel to the US

The Chinese tourism ministry announces the decision

China US

It says that Chinese tourists have been treated unfairly in the US due to the excessive epidemic prevention measures and the current US security situation. Hence, they have asked residents not to travel to the US during the interim period.

I don’t even know how to interpret this but I’m guessing US citizens will feel more relieved by the announcement and perhaps for global markets, it means a lesser likelihood of an epidemic situation in the US? Hmm.
In the ‘bigger, bigger’ picture though, this still points to ongoing animosity between US-China relations and doesn’t set a good platform for Phase Two talks.

China trade Council issues 3325 force majeure certificates

Virus disruptions leading to the action

the China Council for the promotion of international trade is saying that 3325 force majeure certificates have been issued as a way to protect firms from legal damages as a result of the coronavirus outbreak. The certificates cover 8 total contract value of around 270 billion yuan or $38.4BB).
Reports from the US last week indicated that they, and China,  did not expect phase 1 trade agreements would be impacted from the coronavirus.

Australia S&P/ASX 200 index down -1.60%

Cracks below 100 and 200 hour MA

The Australia S&P/ASX 200 index is opening sharply lower. It currently trades down -1.6% at 7025.0.
Cracks below 100 and 200 hour MA
Technically, the price fall has tumbled below its
  • 50 hour moving average at 7126.19
  • 100 hour moving average and rising trend line at 7126.19, and
  • 200 hour moving average at 7051.569

The close risk is now the 200 hour moving average, but traders will likely use the combination of the 100 hour moving average and trend line as the risk for shorts today.

On the downside, the 38.2% retracement of the move up from the 2020 low comes in at 6995.504. That level would be the minimum target to get to and through if the sellers are to probe further to the downside.  The 50% retracement comes in 6933.20.
The fear from the spreading of the coronavirus has increased over the weekend after South Korea put the country on high alert after the number of infections searched over 600 with 6 deaths.  In Italy the number of infected jumped to above 150 from just 3 before Friday with the number of deaths rising to 3.
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