Fragile Stability In Capital Markets Even As SARS Comparisons Grow

Overview: The S&P 500 lost less than 0.3% yesterday, even as the first case of the Wuhan Virus was found in the US. The relative subdued US reaction may have helped stabilize the capital markets today. Nearly all the major markets in the Asia Pacific regions rose, including more than a 1% gain in Hong Kong and South Korea. European shares are posting small gains near midday. Industrials and utilities are offsetting losses in information technology and energy. US shares are trading firmer, and the S&P 500 appears poised to set a new record high today. Asia Pacific yields had to play catch-up with the decline yesterday, and European bonds are little changed. Italy is an exception as political tensions within the coalition are elevated ahead of this week's regional election. The foreign exchange market is subdued. While most of the majors are little changed, the Scandis are firmer, and the Swiss franc is notably the weakest. In fact, the franc's weakness today, the fifth consecutive session of losses, is its longest losing streak since October. Emerging market currencies are narrowly mixed, with the JP Morgan Emerging Market Currency Index lower for the third session and off in eight of the past ten sessions. Gold is inside yesterday's ranges, and WTI for March delivery is pinned near yesterday's lows as it straddles $58 a barrel.  

Asia Pacific

The World Health Organization is expected to decide today whether to regard the new coronavirus that appears to have originated in Wuhan, China, as a public health emergency.  It has spread to at least six countries. Many are drawing parallels with the SARS virus that broke out in 2003, hurting growth and tourism.   

South Korea reported that Q4 growth accelerated to 1.2% after 0.4% in Q3. It was the strongest quarter since Q3 17 and nearly twice the 0.7% median forecast in the Bloomberg survey. The year-over-year pace rose to 2.2% after a 2.0% pace was recorded in both Q2 19 and Q3 19. Separately, Taiwan reported a nearly 6% year-over-year rise in December industrial production. The Bloomberg survey showed expectations were for a 3.7% increase. These data points, alongside the recent Chinese reports, seem to confirm a regional recovery is underway. The news flows in the semiconductor space also continues to improve. The latest development is Apple boosting orders from TSMC for the iPhone. 

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Read more by Marc on his site Marc to Market.

Disclaimer: Opinions expressed are solely of the author’s, based on current ...

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