Archives of “February 27, 2020” day

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The good news is that the European stock markets are closed

  
Analysis, Global Indices
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German DAX, -3.1%. France’s CAC down -3.8%

The good news for the European stock markets is that they are close for the day.  Each of the major indices had sharp declines. Sometimes closing feels good. The provisional closes are showing:
  • German DAX, -3.1%
  • France’s CAC, -3.2%
  • UK’s FTSE 100, -3.5%
  • Spain’s Ibex, -3.8%
  • Italy’s FTSE MIB, -2.6%
To give an idea of the year to date performance of the major indices :
  • Germany, -6.65%
  • France, -7.6%
  • UK FTSE 100, -9.7%
  • Spain’s Ibex, -5.6%
  • Italy’s FTSE MIB, -2.8%
Comparing to the US market year-to-date:
  • Dow industrial average, -7.6%
  • S&P index, -5.63%
  • NASDAQ index -2.42%
In Asia the year-to-date’s are showing:
  • Japan’s Nikkei, -7.22%
  • Hong Kong’s Hang Seng index, -5.01%
  • Australia S&P/ASX 200 -0.39%
  • China’s Shanghai index -1.93%

In other markets as London/European traders look to exit:

  • gold is trading up $12.80 or 0.78% at $1653.72
  • WTI crude oil futures are trading down $-2.08 or -4.25% of $46.66
In the US stock market the snapshot of the major indices currently shows:
  • S&P index -69.3 points or -2.22% of 3047.44
  • NASDAQ index -221.2 points or -2.46% at 8759.96
  • Dow -578 points or at -2.17% at 26371
In the US debt market yields are sharply lower with the 2 year down -8.9 basis points. The 10 year is down -5.8 basis points.. The 2 – 10 yield spread has widened to 20.42 basis points from 17.24 basis points yesterday on increasing expectations that the FOMC will be forced to lower rates
US yields are lower across the board with a letter yield curve
In the European debt market, yields are mixed with German, France, and UK yields lower while Spain, Italy, Portugal yields are higher (flight to safety and out of the riskier countries):
European yields are mixed
In the forex market, the EUR is the strongest (and got stronger in the session).  Germany did say earlier today that they would contemplate more fiscal stimulus and technicals improved. The EURUSD did run into resistance against the 1.100 level however.
The weakest currency is the CAD as oil continues to get hammered. The GBP and USD are also weaker on the day:

IMF likely to downgrade global growth outlook

  
Analysis, Economy

IMF spokesperson

The week or so ago the IMF lowered the global growth forecast by 0.1% as a result of the coronavirus (why even announce it).
A spokesperson is now saying that the IMF is likely to downgrade global growth in the next world economic outlook as a result of the virus.
He/she adds:
  • expects decision soon on impact of coronavirus on spring meetings of IMF/world bank. Issue under active review

The IMF is pretty much stating the obvious.

German government considering possible stimulus programme to combat virus epidemic – report

  
  Analysis

Handelsblatt reports

Germany

The report says that the German government is considering various scenarios and plans to outline potential measures should be ready in a few days. The stimulus programme is largely to combat the virus epidemic if it hits the German economy hard.

The good news for the euro just keeps piling in for now. EUR/USD is now up to 1.0963 to fresh session highs on the day currently.

Italy coronavirus cases are inflated due to testing errors – WHO official

  
  Analysis
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A WHO official with a remark over the coronavirus cases in Italy

Some good news for risk perhaps? The market isn’t budging though as there is no further details on the margin of error. That said, the fact that we are seeing cases become more widespread across Europe doesn’t help to do much damage control for now.

Update: Okay, this is a piece from Corriere which is saying that the Veneto region did not follow test guidelines when testing patients for the infection. Just take note that Veneto had 71 reported infections in the country yesterday, out of the nearly 400 cases reported.

PBOC: We will ensure ample liquidity through targeted RRR cuts at the appropriate time

  
  Analysis

Comments by PBOC vice governor, Liu Guoqiang

PBOC
  • Will increase re-lending and re-discount credit
  • Will launch policies to support capital replenishment of smaller lenders
The Chinese central bank continues to reiterate their determination to push forward with more stimulus measures to prop up the economy. Expect more easing measures down the road as China continues on its path to recovery, which may take quite some time.

Exante – COVID-19 is in the early stages of a pandemic, China numbers not believable

  
  Analysis
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Exante Data is a New York based macro advisory & data analytics firm to funds, central banks, corporates and banks

  • there is a near unanimity of opinion that COVID-19 is in the early stages of a pandemic
  • even the unprecedented public health interventions we are seeing worldwide will be stymied by the atypical transmissibility characteristics of the virus
  • Indonesia’s zero is mathematically implausible
  • The metronomic decline of cases reported across China’s provinces also tests the limits of credulity.
Their advice is not comforting:
  • Our principal message to clients has been that if COVID-19 is not effectively contained by May, the underlying empirical premises upon which risk management systems have been designed and deployed over the past thirty years will necessarily fail.
  • COVID will be beyond the sample available, and cascade through global supply chains and the financial system in ways that no one can credibly predict. This is not to mention the societal and political upheaval entailed.
Bolding mine.
corcoronavirus black swan
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