global equities

Virus Woes Keep Equities under Pressure, US Prelim GDP in Focus

Virus Woes
Virus Woes

Virus woes from US CDCP confirming COVID-19 victims in USA and profit warnings from major corporations keep risk assets under pressure.

Summary: Equities continue to decline as the coronavirus outbreak-related caution keeps risk sentiment under the wraps. As risk aversion continues to grow with each passing day, the global stock market saw a loss of nearly US$3 trillion since this Monday, while the U.S. Treasuries trading in the global market hit record lows.

Headlines from across the globe point to a fast-spreading virus outbreak in all major economies outside of China. Reports from Bank of America point to growth forecast for the global economy this year pointing to lows last seen during the 2009 financial crisis stating that it has revised 2020 forecasts from the previous estimate of 3.1% to 2.8%.

ECB member knot said that the impact of the COVID-19 outbreak on the global economy is likely to be more severe than the impact of the SARS outbreak from 20 years ago. Profit warnings from major corporates continue to hit the market as various firms are finally revising their earnings forecast to include the impact of the virus outbreak for a prolonged duration. This has caused both Asian and European markets to see major indices and key equities suffer from sharp declines today. 

Precious Metals: Rare metals are trading with clear bullish bias following Reuters report, which hinted at loss of nearly $3 trillion from the global stock market on virus outbreak woes. Further, official reports of first virus victims in the U.S. with no connection to China caused U.S. Greenback to weaken, which also fuelled demand for metals as it lower USD meant cheaper exchange rate for traders who hold other major global currencies. 

On The Lookout: Traders are on the lookout for profit warnings from major corporates and virus victim count related headlines. As the count of new COVID-19 victims from across the globe outside of China continues to escalate with each passing day, risk aversion is on the rise. US CDCP confirmed the first virus victim with no ties to China, causing panic to spike as investors fear the possibility of CDCP’s communal virus outbreak warnings coming into a reality.

Microsoft and AB Inbev came out with a revised growth outlook and quarterly earnings forecast, which caused major indices in Europe to slide sharply. U.S. T. Yields are on a decline, causing an increase surrounding Fed rate cut bets. On release front today, the U.S. calendar sees preliminary GDP data, which is expected to see a revision for Q4 reading. Traders also await the release of Core Durable Goods Orders, Initial Jobless Claims, and pending home sales data while the Canadian calendar sees the release of Current account readings for Q4. 

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