Market Overview

12 February 2020

The confident Fed’s President

Yesterday the financial markets were marked by a rise in the value of the main world stock indexes. The serene speech of the president of the Federal Reserve (Fed), Jerome Powell, as well as the general confidence felt that economic impacts caused by the coronavirus will not be so great, were the two main factors that explained this increase. Concerning the latter, the Chinese medical authorities have announced that they expect the spread of the virus to be controlled in April - and this could be seen as a source of confidence for investors.

It is common, in a booming stock market, for the demand for more secure assets to tend to be lower. This was the case in Europe and its debt market, where the yields of the government bonds for the main economies have increased.

As a consequence, and at a time when the market is apparently more confident, the Dollar started to correct against the Euro.

With regard to the Pound Sterling, it is possible to observe the continuous correction of the last few days. In addition, yesterday was strongly driven by news that came out in relation to the estimates of the English Gross Domestic Product, which was above expectations. As a result, the Pound ended up having this strong appreciation throughout the day.

With regard to crude oil, raw material prices rose again during yesterday's session. Contributing to this was a meeting between Vladimir Putin and Igor Sechin of OPEC. The aim of the meeting was to discuss a possible cut of 600,000 barrels per day. Apparently, it will only be decided at a next meeting to be held on the 5th and 6th of March.

Gold, on the other hand, on days marked by confidence and less risk aversion, a day like yesterday, tends to decrease in value.

Material posted here is solely for information purposes and reliance on this may lead to losses. Past performances are not a reliable indicator of future results. Please read our full disclaimer.

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Material posted here is solely for information purposes and reliance on this may lead to losses. Past performances are not a reliable indicator of future results. Please read our full disclaimer.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.