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European equities open higher to start the day

  
Analysis, Global Indices

Virus? What virus?

  • Eurostoxx +0.7%
  • Germany DAX +0.9%
  • France CAC 40 +0.8%
  • UK FTSE +0.6%
  • Spain IBEX +0.5%
Equities are continuing to brush aside coronavirus fears as the good news on US-China trade earlier sets up the perfect platform for a risk-on push in Europe to start the day.
It will now be a question whether or not the momentum can be sustained all the way through US trading as well later today. So far, virus headlines are being brushed aside but just be wary that there are cautionary signs of the fallout that the virus impact is having.

European shares and sharply higher on risk on flows

  
Analysis, Global Indices

German DAX, +1.76% is the biggest one-day gain since October 11

The European stock market was also invited to the “risk on” party today.  All the major indices are up sharply. The German DAX has enjoyed its biggest one-day gain since October 11.  Party on.
The provisional closes are showing:
  • German DAX, +1.76%
  • France’s CAC, +1.68%
  • UK’s FTSE 100, +1.53%.  That is the biggest one-day in 7 weeks
  • Spain’s Ibex, +1.64%
  • Italy’s FTSE MIB, +1.64%
In the European debt market, the 10 year benchmark yields are also mostly higher (the exception is in Italy) as risk fears abate.
German DAX, +1.76% is the biggest one-day gain since October 11In other markets, risk on flows are pervasive:
  • spot gold is now down $24.28 or -1.54% at $1552.43
  • WTI crude oil futures are higher by $0.50 or 1.0% at $50.61, but they are still off the sessions high $51.55. The low today at $49.66 was the lowest level since January 2018.
In the US stock market, the NASDAQ index is up nearly 2% on the day (amazing). The snapshot currently shows:
  • S&P index up 55.34 points or 1.7% at 3304.27
  • NASDAQ index is up 184.55 points or 1.99% at 9458
  • DOw is up 490 points or 1.73% at 28890.34
In the US debt market yields are also higher with the 5 year up 7.5 basis points and the 10 year up 7.2 basis points:

Eurostoxx futures +0.5% in early European trading

  
Analysis, Global Indices

The more positive tone reverberates to Europe in early trades

  • German DAX futures +0.6%
  • French CAC 40 futures +0.5%
  • UK FTSE futures +0.7%
This largely mirrors the more positive mood seen in US futures, which are up by ~0.7% currently. The market continues to view that fears of the coronavirus outbreak are receding and that is also helping to push bond yields and yen pairs higher so far today.

Nikkei 225 closes higher by 0.49% at 23,084.59

  
Analysis, Global Indices

Asian equities rebound amid positive cues since overnight trading

Nikkei 04-02
Wall Street posted decent gains in overnight trading and Chinese markets are also observing more calm on the day, helping to give investors a morale boost after the more tepid and cautious tone in Asia Pacific trading yesterday.
The Hang Seng is up by 1.0% while we are seeing the Shanghai Composite higher by 1.2% while the CSI 300 index is up by 2.5% on the day currently, recovering from the beatdown suffered yesterday after returning from the extended break.
US futures and Treasury yields are also keeping higher as fears surrounding the coronavirus outbreak situation is seen receding for now. That is keeping yen pairs higher on the day with USD/JPY up to 108.82 currently, while gold is down 0.3% to $1,572 at the moment.

PBOC says that stock market plunge today is due to some irrational factors

  
Analysis, Global Indices
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Says that impact from the virus outbreak on China’s economy is temporary

  • Stock market plunge also due to panic triggered by ‘herd effect’
  • Virus outbreak will not change China’s long-term economic fundamentals
  • Economic development still has positive factors and shows strong resilience
Chinese authorities have been offering a lot of reassurances during the course of the day and I reckon this rhetoric could be one that keeps up for the rest of the week as they try to inject some calm into markets today.
For some context, the drop in the Chinese equities today is the most since 2015 and the Shanghai Composite recorded its 6th largest % decline since 2000:
SHCOMP

China’s Shanghai Composite index closes down by 7.7%

  
Analysis, Global Indices

A bad day for Chinese stocks but it could have been worse

SHCOMP 03-02
The talk over the weekend is whether or not we will see Chinese equities be battered down by more than 10%. That didn’t quite happen but the nearly 9% drop in the early stages enough to trigger a flurry of measures by Chinese officials to try and keep the calm.
Meanwhile, the CSI 300 index closes lower by 7.9% on the day with the onshore Chinese yuan still down by over 1% against the US dollar in trading today.
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