Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Stocks shake off China virus worries, dollar gains

Stock MarketsJan 22, 2020 05:19AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. The German share price index DAX graph is pictured at the stock exchange in Frankfurt

By Marc Jones

LONDON (Reuters) - World stock markets looked to be getting back to full strength on Wednesday, as updates from China about the spread of a new flu-like coronavirus raised hopes the outbreak would be contained.

Worries about contagion, particularly as millions travel for upcoming Lunar New Year festivities, have knocked the world's top equity markets off record peaks.

The outbreak has revived memories of the Severe Acute Respiratory Syndrome (SARS) epidemic in 2002-03, a coronavirus outbreak that killed nearly 800 people.

This time, China's response and candour -- in contrast to the SARS epidemic -- have helped reassure investors concerned about the possible global fallout.

China's National Health Commission said on Wednesday there were 440 cases of the new virus, with nine deaths so far. Measures are now in place to minimize public gatherings in the most-affected regions.

Stocks in London, Frankfurt and Paris scored early gains of 0.1% to 0.2%. S&P 500 futures (ESc1) were up 0.5% before the Wall Street open.

Shanghai stocks (SSEC) recovered from an early 1.4% drop to end higher. Japan's Nikkei (N225), South Korea's Kospi index (KS11) and Hong Kong's Hang Seng (HSI) had all risen by more than half a percentage point overnight. Australia's S&P/ASX 200 (AXJO) shrugged off worries to hit a record high.

Italian government bond yields rose as much as 8 basis points on reports the leader of the country's 5-Star party and foreign minister, Luigi Di Maio, will step down.

It was the biggest sell-off in a month and raised the risk of another snap election in Europe's fourth-largest economy, since 5-Star is part of Italy's coalition government.

"The initial reaction was to sell because of the heightened political uncertainty," said Luca Cazzulani, a strategist at UniCredit in Milan. "But there is no outright link between de Maio's resignation and a collapse of the government."

With markets generally rising, safe plays such as gold and the Japanese yen were weaker. The dollar (DXY) was rising toward the highs it reached in December against the other top world currencies. [/FRX]

The coronavirus outbreak has spread from its origin in Wuhan, China, to the United States, Thailand, South Korea, Japan and Taiwan. The World Health Organization meets later on Wednesday to consider whether the outbreak is an international emergency.

"The call here is not that the virus is done or nipped in the bud by any means," said Kay Van-Petersen, global macro strategist at Saxo Capital Markets. "But there have been no big further reported outbreaks, and the response from the Chinese authorities has been very, very positive".

SARS FLASHBACK

Airlines, other travel-exposed stocks and retailers vulnerable to shifts in consumer sentiment have borne the brunt of selling in the past two days, along with the Chinese yuan.

MSCI's airline industry index <.dMIWO0AL00P> posted its biggest daily drop in more than three months on Tuesday. Airline shares were still falling on Wednesday.

"While details on the coronavirus are scant, we reckon that the SARS period could offer some clues as to how markets could pan out," analysts at Singapore's DBS Bank said. "The trends are clear: Yields and stock prices fell in the first few months of the SARS outbreak and rebounded thereafter."

So far, the yield on U.S. 10-year government bonds has stabilized after Tuesday's drop, sitting at 1.78% (US10YT=RR) in European trading. [US/]

Spot gold gave back some gains to trade at $1,555 per ounce and the yuan eased in the onshore market to 6.8997 per dollar.

Oil prices also settled back as traders figured a well-supplied global market would be able to absorb disruptions that have cut Libya's crude production. [O/R]

Brent crude (LCOc1) was down 0.31% at $64.39 a barrel and U.S. crude (CLc1) fell 0.43% to $58.13 a barrel.

Stocks shake off China virus worries, dollar gains
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (5)
emmanuel chibuikem
emmanuel chibuikem Jan 22, 2020 8:34AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
i did not think there was any cause for alarm. The Chinese can handle the issue
Jon Benton
Jon Benton Jan 22, 2020 8:34AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Not if its already in the U.S ?!
emmanuel chibuikem
emmanuel chibuikem Jan 22, 2020 8:34AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Jon Benton  . Oh, I saw that recently, did not know it would *******out of proportion this way.
Gary Doonan
Nanood Jan 22, 2020 4:18AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
There was never fear or panic other than media headlines...
Space Lord
Space Lord Jan 22, 2020 3:47AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
WHO cares about it
greg mason
greg mason Jan 22, 2020 2:37AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Measures are now in place to minimize public gatherings in the most-affected regions? what going to stay controlling people is answer, what a joke, never going to happen people will do as they want and be were they wish to be , heck they China could not and still can't control Hong Kong for how long? this is all politically BS. . China needs to be truthful with issues , not hide till effect world.
greg mason
greg mason Jan 22, 2020 1:54AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
what everything is ok now? they covered it up till they could not hide any longer is what I been reading.. . the world is becoming infected is that right?. . Industries world wide are paying for this , is that right?. . news is slowly coming out~ truth will prove this another scandal my opinion.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email