Daily Markets Broadcast 2020-02-03

Daily Markets Broadcast

2020-02-03

Wall Street drops as coronavirus shows no signs of abating

US indices fell sharply on Friday as the virus continues to spread, with the first death outside of China reported in the Philippines. China’s onshore markets reopen after the extended Lunar New Year break, with the central bank injecting liquidity into local markets.

US30USD Daily Chart

Source: OANDA fxTrade

• The US30 fell the most since August on Friday amid concerms about the global spread of the virus
• The index closed below the 55-day moving average 28,429 for the first time since October 9. The 100-day moving average is at 27,784
• Manufacturing PMI data for January are due today. The final Markit reading is seen unchanged at 51.7 while the ISM equivalent is expected to show an improvement to 48.5 from 47.2. As a word of caution however, Friday’s Chicago PMI for the same month fell sharply to 42.9 from 48.2.

DE30EUR Daily Chart

Source: OANDA fxTrade

• The Germany30 index posted the biggest decline in a week on Friday, pressured by the fall on Wall Street. Losses since the January 22 peak are now at 5.5%
• The index closed below the 100-day moving average at 12,948 for the first time since October 9. The 200-day moving average is at 13,272
• The final readings for German and Euro-zone Markit PMIs are due today. Initial estimates were 45.2 and 47.8, respectively.

CN50USD Weekly Chart

Source: OANDA fxTrade

• China onshore markets re-open today, with futures markets trading heavy last week, dropping for a third straight week
• Futures touched the lowest since August 6 on Friday as the coronavirus spread. The 100-week moving average is at 12,572
• China is providing more than $170 billion worth of liquidity in an attempt to support markets. In addition, banks were told to lend more and not call in loans to companies in Hubei province and other affected regions, while night trading sessions for futures were suspended. Some share pledge contracts can be extended while asset-management rules were also relaxed.

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