Duncan Donald

Mon, Feb 17

Stocks continue to push through highs as Coronavirus cases reach 70,000


Whilst the Coronavirus continues to dominate the headlines globally the overwhelming feel of the markets remains “risk-on” with global stocks and indices continuing to push at all-time highs.  As cases of the virus continue to grow and spread, aside from a significant jump midweek last week as the methodology of case confirmation brought a surge of new cases, which was quickly realised and countered, the rate of growth appears to not be spiralling out of control. Of course, this cannot be taken for granted with over 70,000 cases globally and 1770 deaths this does remain a serious threat not only to the people of China but the Chinese and global economies.


In the last week, we have seen China, Singapore and the Philippines pledge to add stimulus to their economies to make up any cash shortfall caused by the virus. Of course, the slow down in production and operations in Asia will have real impacts on global companies which we will likely see in Q2-Q3 of this year, but for now, the stock markets led by the US Indices seem positively buoyant. This resilience is also evident in the currency markets with the Swiss Franc and Japanese Yen trading heavily on the week and Australian Dollar and New Zealand Dollar which also benefited from a hawkish outlook from the NZ Central Bank last week.


For now, it’s hard to fight the trend of the markets, but a close eye must be kept on developments and spreading of the virus with cruise ships certainly looking like a danger spot for contamination, leading to a 40% fall in new holidays booked year on year.


In the UK it was a turbulent week and PM Johnson and Dominic Cummins wielded the axe in Parliament. In protest to losing his team, Chancellor Sajid Javid resigned from his post sparking concerns over the UK Budget which comes in less than 4 weeks. Far from weighing on the currency we actually saw the Pound actively bought as it was felt that this could open the opportunity to greater fiscal stimulus making a UK interest rate cut less likely.


In the week ahead we have Presidents Day in the US with markets shut. Wednesday brings the minutes of the last rate-setting meeting from the Federal Reserve which will likely be the weeks most significant release. Inflation data and Retail sales will give us a strong idea of the health of the UK economy. We also get the minutes of the Reserve Bank of Australia rates meeting where the reference to the economic effects of Coronavirus will be watched for.


The Week Ahead 


  •         Industrial Production – Japan 
  •         Outstanding loan growth – China 


  •         Employment change – UK 
  •         ZEW Economic Index – Eurozone & Germany 
  •         NY Empire State Manufacturing Index – US 
  •         Machinery Orders - Japan 


  •         Inflation Rate – UK 
  •         Housing Starts – US 
  •         FOMC Minutes 


  •         GfK Consumer Confidence – Ger 
  •         Retail Sales – UK 
  •         Philadelphia Fed Manufacturing Index – US 
  •         Inflation rate – Japan 


  •         Manufacturing PMI – Japan
  •         Markit Manufacturing PMI – Ger
  •         Markit Manufacturing PMI – Eurozone
  •         Markit Manufacturing PMI – UK 
  •         Markit Manufacturing PMI - US