Spreadex Market Update

Coin toss market reaction to coronavirus news leaves them in green, UK GDP to come



After a couple of days of European losses, investors arbitrarily decided to opt for some optimism on Tuesday, boosted by a solid US session last night.

The coronavirus death toll is now above 1000. Professor Gabriel Leung, the head of public health at Hong Kong University, has warned the illness ‘could infect 60%’ of the world population. And there have been increased criticisms about how the Chinese government has handled the outbreak.

However a slowing infection rate, and the assumption that global central banks will step in to provide liquidity when needed, has allowed the coin toss of the market’s mood to come up positive.

The DAX was Tuesday’s standout, a 1.1% surge sending it to an all-time high of 13640 – remarkable given that 2020, still in its relative infancy, has been dominated by alarming US-Iran, Australia fire, coronavirus headlines.

The CAC was slower out of the gate than its German sibling. Nevertheless a 0.7% rise pushed it back above 6050.

The Dow Jones, meanwhile, is looking to add 100 points when the bell rings on Wall Street. That would leave it the right side of 29350, with a fresh record high back in sight.

Though the FTSE matched the DAX’s gains, climbing 1.1%, it was nowhere near last May’s 7900-grazing all-time high. Instead, at 7520, the UK index had to settle for its best price in around a fortnight.

How the FTSE performs the rest of Tuesday is, in part, going to be dictated by sterling’s reaction to the morning’s bountiful UK data. Analysts are expecting a Q4 GDP reading of 0.0% – though a contraction wouldn’t be a surprise given the quarter’s political uncertainty – compared to Q3’s 0.4% growth.

The monthly GDP figure is looking for a big swing, from -0.3% to 0.2%, as are the manufacturing and industrial production numbers, both of which are expected to bounce back into positive territory.

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