ECB's Strategic Review and the Coronavirus Command Investors' Attention

Jan 23 14:01 2020 Print This Article

Overview: The spread of the coronavirus and the lockdown in the epicenter in China has again sapped the risk-taking appetite in the capital markets. Asia is bearing the brunt of the adjustment. Tomorrow starts China's week-long Lunar New Year celebration when markets will be closed, which may have also spurred today's drama that aw the Shanghai Composite tumbled 2.75%, bringing the week's loss to 3.2%, the most in five months.  India was among the few markets in the region that managed to post small gains today.  Europe equities are lower for the fourth day, but losses have been minor, and over the four sessions, the Dow Jones Stoxx 600 is off around 0.5%. US shares are trading with a slight downside bias. The US 10-year benchmark is near 1.74%, the lows for this year, while European bonds yields are off 2-4 bp, with Italy fully participating after yesterday's wobble on changes in the Five Star Movement. The US dollar retains firm tone, rising against most of the world's currencies today. The Australian dollar and Japanese yen are notable exceptions among the majors. The dovish twist by the Bank of Canada yesterday is behind the Canadian dollar's underperformance today. It is the heaviest of the majors, extending yesterday's 0.5% loss with another 0.25% today. Among emerging market currencies, the Chinese yuan fell a little more than 0.35%, and the 1% loss for the week is the most since August. Gold is trading heavier but is rangebound between roughly $1546 and $1568. Growth concerns and a build in US inventories (API says 1.57 mln barrels) continues to pressure oil prices. The March WTI futures contract is extending yesterday's 2.8% loss with another 1.7% leg lower bring light sweet crude prices to their lowest level since early December, which is around 15% below the US-Iran confrontation high (~$65.40) on January 8. A broad measure commodity price (CRB Index) is falling for the fourth consecutive week, during which time it has fallen about 3.75%.   

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About Article Author

Marc to Market

Marc Chandler has been covering the global capital markets in one fashion or another for more than 25 years, working at economic consulting firms and global investment banks. Chandler attended North Central College for undergraduate work, where he majored in political science and the humanities. He holds master's degrees from Northern Illinois University and University of Pittsburgh in American History and International Political Economy. Currently Chandler teaches at New York University Center for Global Affairs, where he is an associate professor. A prolific writer and speaker he appears regularly in the press and has spoken for, and is an honorary fellow of, the Foreign Policy Association. In addition to being quoted in the financial press daily, Chandler has been published in the Financial Times, Foreign Affairs, and the Washington Post. In 2009, Chandler was named a Business Visionary by Forbes. In 2009, his book, Making Sense of the Dollar, was published by Bloomberg Press and received a Bronze Award from Independent Publishers.

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