Equity Analysis and News
- Dow Jones | Catastrophic Losses as Coronavirus Hits
- FTSE 100 | UK and EU to Lock Horns in Brexit Talks
Source: Thomson Reuters, DailyFX
Dow Jones | Catastrophic Losses as Coronavirus Hits
Catastrophic losses across global equity markets as the coronavirus hits back with a soaring number of cases outside of China. US equities saw its 4th largest weekly drop since 1927, falling over 13% while US treasury yields crashed to a record low (10yr yielding 1.16% at time of writing) as markets aggressive price in Fed easing (Figure 1). The question that is on investors minds is what the negative impact will be and for how long it will last, however, the authorities yet to sufficiently contain the spread of the virus, it will be a while until this question is answered. Another focal point for markets will be the potential response from central bankers, However, despite the large repricing of near term easing from the Fed, rate setters have yet to signal that such action is needed.
Figure 1. Aggressive Market Pricing for Fed Stimulus
Source: Refinitiv
The Chinese Manufacturing PMI will provide the first notable signs of the impact that the coronavirus has had. Although, what the number will print is anyone’s guess given the large spread of forecaster expectations. At the back end of the week, the latest NFP report will be released, however, given the current narrative that has dictated risk sentiment, the data is not expected to have a notable impact.
Source: Refinitiv
Dow Jones Price Chart: Weekly Time Frame
Source: IG Charts
FTSE 100 | UK and EU to Lock Horns in Brexit Talks
Aside from the fears pertaining to the spread of the coronavirus, UK assets will be increasingly focused on Brexit once again. Both the UK and EU have announced their mandates for negotiations with trade talks due to commence from next week. However, given the notable differences between the two parties, talks are expected to get off to a difficult start and thus the FTSE 100 may continue to struggle.
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UK Stance |
EU Stance |
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No aligment over regulation |
Level playing field |
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No extension of transition period |
Willing to have extension depending on the UK’s fullfilment of other obligations |
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Control over fisheries |
Current equal access to fishing waters should be maintained |
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Control over immigration |
No free movement of goods and services without the free movement of people |
FTSE 100 Price Chart: Daily Time Frame
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— Written by Justin McQueen, Market Analyst
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