At the end of last week it seemed like a lot of the market’s major concerns had been cleared from the table, leaving investors searching for the next headline story to drive trading. It appears that they’ve found a contender in the coronavirus in China.
An increase in the number of cases of the virus to 200-plus people is itself alarming. More so is the fact the virus – which causes a type of pneumonia and can be passed person-to-person – has started to spread beyond Wuhan, where most of the cases are located. The illness has now been detected in Beijing, Shanghai and Shenzhen, alongside abroad in Japan, Thailand and South Korea.
Viewed from a market-perspective, anything that can potentially harm the Chinese economic machine is bad news, hence why Asia took a dive overnight. The Nikkei was down 0.9%, with the Shanghai Composite falling 1.4%. Those losses have been echoed in Europe: the FTSE slipped to 7575 after a 1% decline, with the DAX and CAC shedding 0.7% and 1.1% respectively.
How long the coronavirus outbreak remains the main market mover is unclear, especially with Donald Trump set to step up to the podium in Davos mid-morning.
Elsewhere, the pound was completely unchanged against the dollar and euro ahead of the day’s UK jobs report. Wage growth, including bonuses, is set to fall from 3.2% to 3.1% month-on-month, with the unemployment rate steady at 3.8% and jobless claims jumping from 28.8k to 33.4k.
The Eurozone will also be interested in the latest ZEW economic readings. The German figure is looking to rise from 10.7 to 15.2, while the region-wide number is set to climb from 11.2 to 16.3.
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