Weekly Feed4 Mins Read
Kristal Weekly Feed I 03rd 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:
- Coronavirus fear intensifies with most major indices around the globe experiencing huge fall
- Gold prices on track for their biggest monthly gain since September 2019 as investors scurry for safer havens
- WHO declares China coronavirus as a global health emergency
- Major blue-chip companies in the US report impressive earnings allaying some fears
- Chinese authorities extend the Lunar New Year break by three days as the virus crisis worsens. Markets to reopen on February 3, 2020
- UK prepares to leave the EU an hour before midnight on Friday
- Oil experiences fourth consecutive week of losses as coronavirus fear spreads – posts worst month since May 2019
As China’s coronavirus turns into a pandemic with at least 250 people dead in China and more than 12000 infected with confirmed cases in Asia, Europe, the Middle East, and North America, the World Health Organization (WHO) has declared it to be a global health emergency. Investors around the globe are concerned about the impact of the virus on the world economy.
How did the week start?
- United States: In the U.S., the week started amidst fears of the spread of coronavirus across the globe. All three major indices experienced a decline as the Centers for Disease Control and Prevention investigated 110 people across 26 states for the disease. The U.S. markets experienced their worst drop in four months.
- Europe: European stocks had a bad start to the week with most stocks closing sharply lower due to intensifying fears the economic fallout from the coronavirus outbreak.
- Asia-Pacific: Most Asian markets remained closed on Monday due to the Lunar New Year holiday. Japan traded lower as the coronavirus fear gripped investors.
The U.S. and European markets had a mixed week while Asian markets were primarily in the red.
Let’s take a look at how the global markets performed during the week.
The U.S. markets experienced their worst drop in four months as most major indices closed sharply lower on Monday. On Tuesday, stocks of major technology companies surged in anticipation of the quarterly earnings report. Most indices recovered from the heavy losses on Monday.
This positive sentiment helped the markets stay in the green over the next two days despite the news of deaths due to coronavirus. Apart from technology companies, the earnings reports from other blue-chip companies like Coca Cola, Microsoft, etc. were better than expected that helped investors look beyond their fears over the outbreak of the virus. By the end of the day on Thursday, the WHO declared China’s coronavirus as a global health emergency. The effects of this declaration were felt on Friday as stocks slumped and most major indices experienced a sharp fall.
Like in most of the other parts of the world, European markets had a bad start to the week with most stocks slumping as the fears of the spread of coronavirus intensified. Over the next two days, European investors brushed off concerns regarding China’s coronavirus that resulted in major indices closing higher.
The positive market sentiment in the US helped ease the fear and push European markets in the green. On Thursday, as the news of the rising death toll due to the virus and the impending Brexit on the 31st led to the markets closing lower. On Friday, the first two cases of coronavirus were confirmed in the UK. Further, the initial GDP growth estimates published on Friday were not promising either. This led to all sectors experiencing losses and most major indices closing in the red.
While China remained the focus of the attention of news regarding the virus outbreak, markets in China remained closed for the entire week. Trading was scheduled to resume on Wednesday after the Lunar New Year holiday. However, authorities extended the break by three days to cope with the intensifying coronavirus crisis. Markets will reopen on February 3, 2020. Most major markets in Asia remained closed on Monday with the exception of Japan.
Markets in Japan started the week in the red zone amidst China’s virus concerns. By Tuesday, South Korean markets had resumed trading but experienced a sharp decline too. On Wednesday, Hong Kong markets sprang into action too but the stocks plummeted due to coronavirus fears. However, Japan and South Korean markets managed to close in the green. On Thursday, Taiwan’s markets returned to trade but experienced a sharp decline too.
As the news of the increasing death toll spread around the region, most major indices suffered sharp losses. Asian markets experienced a mixed day on Friday with Hong Kong and South Korean facing declines while Japan and Taiwan posting crucial gains.
Heading into the next week…
Last week, we expected coronavirus to be the theme of the coming few weeks. Since the virus is not yet been brought under control, we expect volatility to continue. Most investors are aware that over the long-term, markets will recover. However, they are waiting for some certain news to start jumping in. We would recommend investors to continue tracking news about the virus, its spread and control, to assess its impact on global markets.
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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