With the Shanghai Composite climbing 1.4% overnight, the European markets felt comfortable continuing yesterday’s rebound.
Investors find themselves at an interesting, slightly difficult point in the coronavirus outbreak timeline. Though it is still the main news driving trading, it is not exactly a one-to-one relationship between the headlines and market-reaction. For example, Monday saw the biggest single-day jump in the death toll, pushing that number past the number of people who died during the early noughties SARS outbreak. AND oil entered a bear market. Yet Europe and the US rebounded.
This has happened multiple times since the outbreak began, investors picking and choosing what developments they are willing to pay attention to. Further complicating matters is the fact the thing causing concern, i.e. the impact on the Chinese economy, won’t really be known until the next batch of data out of the country. And even then, investors will be forewarned about any sharp drop in the first quarter; the full extent of the impact might not been seen until the end of Q2, when it will be more apparent whether or not the impact was contained to Q1.
Nevertheless, Europe drove higher, buoyed by its commodities. The DAX and CAC added 1.1% and 1% respectively, with the FTSE nearing 7440 as it climbed 100 points. The UK index benefited from the 4% jump seen by BP (LON:BP); though the oil giant saw a $2.7 billion drop in full year underlying replacement cost profit, that was better than forecast.
The Dow Jones, meanwhile, is looking at a 300 point surge when the bell rings on Wall Street, rocking the index back to 28700.
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