Market Overview

24 February 2020

The Virus is Taking Other Routes

Last Friday was marked by a great sense of risk aversion. Its origin was essentially the spread of the coronavirus outside Chinese territory. Not only China, but also South Korea and Japan reported an increase in people infected with the virus.

This ended up causing a decrease in the main world indices which eventually led to them closing at a lower position from the previous day. The Stoxx 600 ended the session by depreciating by 0.49%, while the S&P 500 fell by 1.05% and the technological Nasdaq dropped by 1.79%. The sectors which fell the most were the energy, banking and the automobile sectors - car sales sank 92% in China.

The debt market, on the other hand, revealed that the interest rates of the main countries ended up rising. Despite a risk aversion, it was possible to observe the rise of Eurozone interest rates - investors may have preferred other safe assets.

The European currency ended up appreciating substantially on Friday. Basically, the good Manufacturing and Services PMI data for the Eurozone, and in particular for Germany, contributed to an increase of 0.68%.

The bad news led to a drop in oil prices. The Institute of International Finance (IFI) revealed on Friday that demand for oil in China is expected to be lower than initially forecasted. As a result, crude oil fell by 1.22%.

Gold, on a typical risk aversion day, appreciated substantially by 1.31%.

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