Company / Analytics

Analytics, 01 March 2020

Week 9 in Brief

This week global stocks suffered their worst week since the financial crisis amid Coronavirus fears. The S&P500 tumbled for a seventh day, with the S&P500 index falling about 0.8%, bringing its loss for the week to about 11.5%. Other economic indicators are flashing warning signs. The Dow Jones industrial average fell more than 1% on Friday.

“In Europe, Britain’s FTSE 100 fell more than 3% and the Dax in Germany fell more than 4%. In Asia, the Nikkei 225 in Japan closed down 3.7%, the KOSPI in South Korea dropped 3.3%, and the Shanghai Composite in China dropped 3.7%,” according to the New York Times. The selloff in global markets has scared politicians and central bankers alike. Fear has driven money out of stocks and into bonds. The US 10 year has hit a record low of 1.14%.

In the oil market, the crash continued as Brent broke through the $50 per barrel mark during intraday trading. Oil is set to close out the week with the worst loss in four years. Whether this is an overreaction to the coronavirus or not is yet to be seen. The fall in oil prices represents a general trend in the fall of energy stocks along with the rest of the stock market. Energy stocks plunge. Along with the rest of the stock market, energy shares fell sharply on Thursday, with the worst of the carnage reserved for drillers that also reported disappointing earnings.

Even history’s safest haven cannot escape coronavirus. The gold price tumbled with losses extending down $78. “Gold’s reputation as a safe haven in times of financial turmoil was tarnished on Friday as the growing panic about the spread of coronavirus infections outside China saw the precious metal suffer one of its worst one-day drops on record. Gold gapped down at the open on the Comex market in New York and kept declining hitting a day low of $1,564.00 an ounce in afternoon trade, down $78 an ounce or 4.8% compared to Thursday’s close. By the close the metal had recovered some losses, climbing back above $1,580.

Forecasts for next week?

While in the United States public areas and shopping malls have not been turned into ghost towns as with regions where COVID-19 virus has struck, roughly $2 trillion dollars has been wiped from the stock market in a matter of days.

US health officials warned Americans this week to roll up their sleeves, pull up their bootstraps and settle in because the coronavirus is on its way. It appears the virus doesn’t need to be rampant to start wearing down consumer sentiment. Next week will be critical as traders are scared about corporate earning with all of the shutdowns. China is only now slowly going back to work after a 30-day shutdown in an effort to contain coronavirus. Nothing could be further from the truth.

CNBC notes that “The outlook for the week could be changed this weekend by coronavirus headlines or by some sort of intervention by central banks. Expectations are rising on Wall Street that there could be some potential move from the Federal Reserve to get ahead of what could be another rough week.” “Investors will also likely grapple with more warnings from major companies about broken supply chains and easing demand due to the outbreak. Apple, Microsoft, Nike and United Airlines have all sounded alarms that they will not meet their earnings and revenue guidance because of the virus.

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