Global stocks soar as markets ignore rising coronavirus death toll
Global stocks rose today as market participants calmed their nerves over the coronavirus outbreak that has swept across Asia. European equities rose to record levels, with the Stoxx 40 index soaring by almost a percentage point. In the UK, the FTSE rose by 0.4% while in Asia, the Hang Seng index rose by 1.3%. This happened as the number of people who have died from the disease passed the 1,000 milestone. Traders appear to believe that the disease will have minimal impact on the global economy. In a statement, Moody’s said that the disease will have muted economic impact on Europe and the US. S&P Global, another ratings agency, has warned that the illness could disrupt supply chains for autos, electronics, and chemicals. In a report, Goldman Sachs said that risk appetite among investors had bounced back as “concerns of the virus fade.”
The sterling rose today as the market received mixed economic data from the country. Data from the ONS showed that the economy stagnated in the fourth quarter. This was mostly because of uncertainties over Brexit. According to the ONS, robust economic activity in services and construction sectors were offset by weak performance from the manufacturing sector. The numbers showed that the economy expanded by 1.4% in 2019. The auto industry was one of the weakest sectors in the quarter. Manufacturing production rose by just 0.3% while industrial production rose by just 0.1%. These sectors have been weak since the country voted for Brexit in 2016.
The dollar index rose slightly as the market waited for a testimony by Jerome Powell. He will be testifying to a congressional committee. Traders will want to know how the Fed is preparing to deal with the coronavirus illness. This is because concerns over the illness were not pronounced during the December and January meetings. Meanwhile, investors are worried about a strong dollar. The dollar index has risen by more than 2.4% this year. A strong dollar is usually negative for American stocks.
The EUR/USD pair declined to an intraday low of 1.0900. The pair has been on a strong downward trend after it reached December’s high of 1.1240. The current price is the lowest it has been since October 1 last year. The pair is trading below all the short and medium-term moving averages. The pair’s RSI has remained below the oversold level of 30 since February 6. While the pair may continue moving lower, there is a possibility that this could change during the Fed chair testimony.
The GBP/USD pair rose by a few pips today on mixed economic data from the UK. The pair rose from a low of 1.2895 to an intraday high of 1.2937. The pair still remains close to the lowest level since December last year. The price is along the 14-day exponential moving average but slightly below the 28-day EMA. The average true range indicator has not made major moves, which is a signal of low volatility. The signal and main line of the MACD have made a bullish crossover. The pair may continue moving upwards during the American session.
The XBR/USD pair rose slightly today as market participants brushed-off concerns over coronavirus. The pair rose from an intraday low of 53.17 to a high of 54.40. The price remains close to the lowest level since October last year. The price is slightly above the 14-day and 28-day EMAs on the hourly chart. The RSI has moved from the oversold level of 26 to the current 47. The DeMarker has also moved from the oversold level of 0.3 to a high of 0.5. The pair may also continue to move higher during the American session.