With the coronavirus death toll leaping 29% overnight, the European markets reverted back to panic mode, quickly unravelling the rebound managed in the last couple of sessions.
The market’s fears weren’t helped by the Fed on Wednesday evening. As the central bank kept rates unchanged, while re-upping its commitment to 2% inflation, Jerome Powell refused to speculate on the full impact of the coronavirus, though he did acknowledge the potential for any economic disruption in China to spill over to the US.
The DAX shed 170 points after the bell, dragging the German index the wrong side of 13200 and back to a 3-week low. The CAC was in a similar position, tumbling under 5900 as it fell 1.4%. In contrast, the Dow Jones is currently eyeing a comparatively measured 0.7% decline, one that’d take it below 28550.
The FTSE managed to keep its losses at 0.9% early on Thursday, sinking to 7425. Yet the only reason it was able to outperform its Eurozone peers was the latest slide from sterling.
The pound dropped 0.3% against the dollar and euro alike. That took cable below $1.2986, leaving it at a month low, while pushing sterling under €1.1785.
It is clearly anxious about this afternoon’s knife edge Bank of England meeting. The big question is, will Mark Carney oversee a nasty goodbye, the MPC cutting interest rates in his last appearance as governor, or will that decision be punted to the Andrew Bailey era? There’s evidence for both, be it the UK’s contracting economy in November or the suggestion of a return to growth by January’s flash PMIs.
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