By Deepta Bolaky
Investors exert caution this week as the Coronavirus is spreading quickly across borders ahead of a busy holiday period in China for the Chinese Lunar New Year. China has locked down over eight cities to prevent a global pandemic and has cancelled the New Year celebrations. So far, cases have also been reported in the US, Japan, South Korea, Thailand, Singapore, Hong Kong, Vietnam, and Macau.
Major equity indices struggled to find a firm direction at the start of the week as investors are concerned that the virus will dent economic growth. The World Health Organisation calmed fears when they resisted the growing calls to make an emergency declaration about the Wuhan coronavirus.
World Equity Indices (% Change)
Source: Bloomberg Terminal
The US markets recovered towards the end of the week while Chinese stocks remained deep in the red.
The Bank of Canada stood out its dovish tones to the rate outlook. As widely expected, the central bank kept its interest rate unchanged at 1.75%, but take note of the significant slowdown since the third quarter and the string of disappointing readings related to the Canadian consumer.
The Canadian dollar lost ground against the US dollar after the central bank’s meeting. The USDCAD reclaimed the 1.31 level.
Source: GO MT4
On the other side, there was a lack of important updates or clues on future monetary policy at the ECB meeting. We note that Christine Lagarde used the word “moderate” rather than “mild” with regard to inflation. The Euro fell to a seven-week low against the US dollar.
The forum was focus on Climate Change and the organisers have also pay special attention to ensure that the “green” shift is also included in the way the event was organised. While climate change was the hot topic and we saw heated discussions hitting headlines, the following also caught investors’ attention:
As of writing, traders are awaiting for the PMI figures for the Eurozone area, Germany, UK and the US. The fresh reports on the manufacturing industry will help to validate the recovery in the global economy.
|Monday, 27 January 2020
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