Weekly Feed5 Mins Read
Kristal Weekly Feed I 10th February 2020
With a busy schedule, it can get difficult to understand and analyze major events around the globe and how they affect your investments. In our weekly market update, we help you slice and dice the latest news updates to make informed investment decisions.
Headlines this week:
- It was a week in the Green for most global indices as investors managed to allay their fears regarding the coronavirus outbreak
- Oil prices drop to their lowest levels in one year as the impact on global trade due to the virus outbreak increases
- China declares that it will cut tariffs on $75 billion of imports by 50% from February 14, 2020
- Most Asian markets reopen in the Red after the extended Lunar New Year break but post a good week
- European markets post record highs this week but end on a weak note as concerns about the economic damage from the coronavirus outbreak halt a stellar run
China’s coronavirus now has more than 37,000 confirmed cases around the globe and the death toll has crossed the 800 mark. This week most markets traded in the Green as positive news about the development of a vaccine for the virus helped investors brush their fears aside and look at other economic factors. Also, with China announcing 50% cuts in tariffs on US imports, most markets posted good gains. The rally came to a halt on Friday as investors were unsure about the developments of the virus over the weekend and markets pulled back a little.
How did the week start?
- United States: It was a positive start to the week in the US as news about the US manufacturing activity rebounding in January hit the markets. Also, some heavyweight technology shares posted good gains and investors shrugged off coronavirus fears and traded with a positive sentiment.
- Europe: European investors were relieved with the UK finally exiting the EU and the enthusiasm drove the markets high on Monday. While concerns over the spread of coronavirus dampened the optimism, most indices posted decent gains.
- Asia-Pacific: As the markets reopened from an extended Lunar New Year break, most indices in Asia declined on Monday.
Let’s take a look at how the global markets performed during the week.
The U.S. markets had a good week considering the battering most of the stocks took last week. On Monday, the Institute for Supply Management (ISM) declared that the manufacturing activity index had climbed to 50.9 – its highest level since July 2019. This led to positive investor sentiment as most people believed that this indicated the bottoming out of the slump in business investment.
The Chinese government declared on Tuesday that it was taking several measures to protect its economy from the impact of coronavirus. This news coupled with some strong economic data boosted investor’s confidence and kept the markets in the green. As the week progressed, hopes of a possible vaccine to contain the deadly virus helped keep the market sentiment positive and resulted in the third straight day of gains on Wednesday.
On Thursday, China announced that it will reduce the tariff on $75 billion of US imports by 50% starting February 14, 2020. This helped the markets continue the rally for four straight days. Wall Street fell from record highs and ended the four-day rally with most indices pulling back on Friday. While investors received some positive news from the US job report, fears of the developments of the virus over the weekend worked as a dampener. The markets still posted strong gains for the week.
European investors displayed a lot of resilience as the enthusiasm over the U.K. exiting the EU gripped the markets on Monday. They shrugged off the fears regarding the spread of coronavirus and started the week on a positive note. Extending their recovery from last week’s sell-off, European stocks posted strong gains on Tuesday. The rally continued for the third straight day as news of possible positive earnings reports and a vaccine to contain the coronavirus drove market sentiment. The markets inched closer to record highs.
Thursday was a good day for the markets around the globe including Europe as China announced cuts in U.S. tariffs on $75 billion of imports by 50%. The markets touched record highs. The four-day rally halted on Friday as underwhelming earnings reports and fears about the economic damage due to the spread of the virus gripped the investors. It was the best week for the European markets since 2018.
Asian markets reopened after an extended Lunar New Year break on Monday. The week started with most major indices closing in the red as they returned to trade in the middle of the coronavirus outbreak. Hong Kong’s Hang Seng Index climbed 0.17% as tech giants Alibaba and Tencent posted strong gains in the last hour of trading. Over the next three days, Asian markets recovered from the losses on Monday and closed in the green.
While Tuesday saw a partial recovery in China, most other Asian indices posted strong gains. The markets built on gains from the previous session and traded higher on Wednesday. Asian stocks also jumped on Thursday (in sync with the markets around the world) as investors reacted positively to China’s declaration of reduction in tariff on $75 billion of US imports by 50%. This development, coupled with some unconfirmed reports about breakthroughs in the development of a drug for the virus boosted investor sentiment.
By the end of the week, most Asian markets pulled back from the gains posted during the week as investors booked profits and reduced risks ahead of the weekend.
Heading into next week…
This week, most investors around the globe displayed resilience and were willing to shrug off fears of the spread of coronavirus and keep an optimistic outlook towards the markets. In the next week, as China rolls out its tariff cuts, people will keep a close eye on the developments around the spread of the virus. Most investors are awaiting news of a cure that might allay their fears and help in boosting the markets. We continue to monitor the situation and are here for any help you may need!
The materials and data contained herein are for information only and shall in no event be construed as an offer to purchase or sell or the solicitation of an offer to purchase or sell any securities in any jurisdiction. Kristal Advisors does not make any representation, undertaking, warranty or guarantee as to the update, completeness, correctness, reliability or accuracy of the materials and data herein. All opinions, forecasts or estimation expressed herein are subject to change without prior notice. Kristal Advisors and its affiliates accept no liability or responsibility whatsoever for any direct or consequential loss and/or damages arising out of or in relation to any use of opinions, forecasts, materials and data contained herein or otherwise arising in connection therewith.
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