Kristal Weekly Feed I 24th 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 mixed week, with Wednesday being the best day for markets around the globe. While the Covid-19 epidemic continues to dominate the market sentiment, investors tried to hold on to any positive economic data
• Gold climbed to a 7-year high at $1617.50 per ounce on Thursday
• Apple Inc. declared that the epidemic might affect its second-quarter results as its supply chains in Asia have been affected
• China lowered financing costs for businesses and cuts its benchmark lending rates to support the economy

Tracking the 2019-n-CoV

China’s coronavirus now has 77,794 confirmed cases around the globe and the death toll is at 2359. Countries with confirmed cases of Covid-19 include China, Japan, Singapore, Malaysia, VietNam, Philippines, Cambodia, Republic of Korea, Australia, Thailand, India, Nepal, Sri Lanka, Canada, the USA, the UK, Germany, France, Italy, Belgium, Spain, Finland, Sweden, Israel, the UAE, Iran, Lebanon, and Egypt.

Market Update

United States: The US markets were closed on Monday on account of the President’s Day.

Europe: European markets have a good start to the week despite the holiday in the US taking the steam off the market. China’s attempts to limit the economic impact of the epidemic helped raise the investor spirits.

Asia-Pacific: The Asia-Pacific markets had a mixed start to the week as investors remained skeptical about the potential economic impact of the spread of Covid-19. While China, Hong Kong, and New Zealand closed in the green, most other markets found themselves closing lower.

Let’s take a look at how the global markets performed during the week.

United States

The US markets remained closed on Monday on account of the President’s Day. As the markets resumed on Tuesday, investors displayed doubts over the impact of Covid-19 on the global economy and manufacturing supply chains. Apple Inc. declared that since its supply chains in Asian countries are impacted, it might not be able to meet its quarterly revenue forecast. This led to the markets ending lower.

On Wednesday, the Federal Reserve reaffirmed its positive outlook about the US economy and kept its benchmark lending rate unchanged at 1.5-1.75%. As the number of cases grew, major technology company shares took a beating due to the high exposure of these companies to Chinese and other Asian countries’ manufacturing units. Major indices in the US closed in the red. The losses continued for the second straight session on Friday as the technology sector suffered.

Europe

Monday was a good day for the European markets Italian banks rallied and news about China’s renewed attempts to limit the economic impact of the virus reached the investors. Despite the US markets remaining closed, the European investors didn’t allow the duller market activity to affect their positive sentiment. With Apple Inc. declaring that it might not be able to meet its quarterly revenue forecast, the market sentiment took a thrashing as fears over the economic impact of the epidemic persisted. On Wednesday, news about a slight slowing of the rate of new cases of Covid-19 helped boost the European markets.

Also, China’s attempts to ‘return to production’ helped improve the market sentiment. Despite the slowdown in new cases, disappointed earning reports weighed on the market sentiment on Thursday. The markets remained mixed. By the end of the week, a rise in the number of Covid-19 cases coupled with weak US business data led to most European shares falling.

Asia Pacific

With concerns about the potential economic impact of Covid-19 spreading, markets in the Asia-Pacific region started the week toggling between losses and gains. China had a great start to the week with the Shanghai Composite Index gaining 2.28%. Hong Kong and New Zealand markets were the next to close in the green with 0.52% and 0.45% gains respectively. Apart from the marginal 0.6% gains in Thailand, most other markets closed in the red. Following the global trend, markets in the Asia-Pacific ended lower on Tuesday as Apple Inc. declared potential problems with meeting its quarterly revenue forecast.

However, most markets bounced back on Wednesday as investors took heart from China’s attempts to return to production and control the potential impact of the epidemic on its economy. While the investors would have continued their optimistic sentiment into Thursday as well, news about an increase in the number of Covid-19 cases in Japan and South Korea dampened the mood. The markets remained mixed. On Friday, most markets closed lower as China voiced its concerns about the epidemic spreading beyond China and disrupt the world economy.

Heading into next week…

As Covid-19 continues to be the central theme of markets around the world, promising economic data can help inject the required optimism in the markets. With Apple Inc. acknowledging the impact of the epidemic on its supply chains, investors should keep a close eye on any similar announcements from major companies in the manufacturing sector along with any developments and updates on Covid-19.