 The world got one big step closer to Wuhan coronavirus pandemic with explosion of number of cases outside China in the past last week. South Korea (3150 cases, 16 deaths), Italy (888 cases, 21 deaths) and Iran (388 cases, 34 deaths) are now the new epicenters, while Japan (235 cases and 5 deaths) is not far behind. Fear global recessions prompted steepest selloff in stocks since 2008 financial crisis. In particular, gold also lost its safe haven status and suffered the worst decline since 2013. Also traders and investors are in panic. In the currency markets, Australian Dollar was the worst performing one even though corona virus cases are just limited to 25. New Zealand Dollar followed as second weakest while Canadian Dollar was the next, as pressure by free fall in oil prices. Yen reversed its fortune and ended as the strongest one, followed by Euro and then Swiss Franc. Euro was indeed helped by some selling pressure in Dollar, bets on a March rate cut surged sharply. Traders are seeing near 100% of -50bps cuts to 1.00-1.25%. For the near term tough, DOW and Gold are both close to important support zones. Last week's could also be partly due to month end adjustments. There is prospect of stabilization of risk sentiments initially this week. But what's next will very much depends on how quickly the coronavirus spreads, and how well is China's productions resume. |
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