Market Overview

14 February 2020

After all, the virus is not that well controlled

Yesterday, European markets ended up falling. Its main index - Stoxx 600 - depreciated by 0.02%. The main reason for these events was probably the unpleasant news regarding the coronavirus. In particular, Chinese authorities reported that the number of infected people had increased dramatically due to a flaw in the method used to diagnose patients. Considering this news, it maybe thought that the impact of the virus on the real economy may be greater than initially thought and predicted.

As a consequence, in days of greater risk aversion, interest rates on sovereign public debt tends to fall and this is what happened yesterday in Europe.

Moreover, the Euro continues to fall, and yesterday it hit a two-year low. Therefore, it is possible to observe that in days of greater uncertainty in the markets, and if this uncertainty does not directly affect the United States, the Euro tends to depreciate against the Dollar as the American currency is the main driving currency in the financial markets.

The Pound Sterling, on the other hand, continues to appreciate and therefore its "undervaluation" is corrected, which has been sometimes pointed out by analysts. The fall in the value of the Euro when compared to the British currency was quite significant.

Crude oil continues to recover and the bad news regarding the coronavirus seems not to affect the price trend in any way. In addition, the International Energy Agency (IEA) also predicted a drop in demand in this first quarter, however without any impact on a possible decrease in price. Yesterday the rise was 0.47%.

Regarding gold, on days of greater risk aversion, it tends to increase its value. Yesterday turned out to be one of these days.

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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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.