Equities Continue To Oscillate On Virus Outbreak Woes, US GDP in Focus

Karthik Subramanian

Karthik Subramanian has been a professional trader and fund manager over the last 18 years. He is basically a software developer who made the transition to financial domain around 18 years back as the attractiveness of the financial markets proved too much for him. He lives in Chennai in India along with his wife and son. He began his career as a software developer in 1999 and then gradually moved into the financial industry as he began trading stocks in his pastime. He then moved into the financial markets full time and then shifted his focus to the FX markets due to the liquid nature of these markets. Since then, he has been trading FX diligently and his favourite pair are the EURUSD and EURJPY. Over the last couple of years, he has found blockchain to be of high interest and considering his background in software and finance, he has since assembled a team of highly talented developers who have since worked on a variety of projects like crypto exchanges and blockchain architecturing. Now, he balances his time between trading and commenting on both the FX and crypto markets. He has worked with many publications including FX Street and Finance Magnates, which has helped him gain experience and also recognition across the industry. He loves to write and this passion has helped him to reach out across the FX and crypto industry. Right now, he works on his pet projects in the FX and crypto industry and spends his time writing and managing his blockchain team and helping it to reach higher.

coronavirus

Equities Continue To Oscillate On Virus Outbreak Woes, US GDP in Focus

January 31, 2020

Earnings to continue dominating Wall Street and US GDP in focus but WHO updates may affect risk assets related price activity. 

Virus Outbreak WoesSummary: Global equities lost gains from the previous session and are back near weekly lows with risk aversion prevalent in global investor sentiment. As death tolls continue to rise on the Chinese virus outbreak, headlines popped up hinting at WHO considering declaring the virus outbreak as a global concern going back on their previous statement. This has caused risk appetite to be completely wiped out in trading activity across major global stock exchanges in trading session today.

European market opened on a dovish note over cues from the international market and saw major indices and key stocks take further hit from a slew of disappointing earnings update adding to the already high bearish market mood. In the forex market, risk currencies declined while safe-haven currencies and USD climbed high on safe-haven demand and sell-off surrounding major currencies. 

Precious Metals: Rare metals are enjoying a field day today in the global market on a sharp spike in safe-haven demand. While USD may remain firm, reports which suggest WHO may go back on their statement and declare coronavirus outbreak as global concern over escalating death toll underpins demand for rare metals.

Crude Oil: Crude Oil saw the price of both major international benchmarks and key futures fall sharply as virus outbreak woes continue to escalate to fresh highs. Larger than expected spike in US weekly crude oil inventory stockpile also came as a major blow as the glut scenario continues to grow with high supply and waning demand. 

AUD/USD: The pair lose all of the gains made so far this week and has declined below mid-0.67 handle as risk aversion induced by virus outbreak woes weigh down the Chinese proxy. Meanwhile, increasing demand for USD on broad-based risk currency sell-off also adds pressure to AUD bulls. However, the pair exhibits strong support around 0.6700 handle which helps prevent a bearish breakout. 

On The Lookout: The focus today lies in several major events. Starting with Bank of England’s interest rate decision, traders hope for a fresh update on virus outbreak from WHO, key earnings report and Brexit proceedings. Bank of England kept interest rates unchanged despite broad-based expectation for rate cut which is welcoming the move as traders face Brexit deadline as UK & EU seem all set to begin parting ways officially tomorrow.

Virus Outbreak WoesOn earnings calendar schedule, Wall Street sees quarterly reports from Alexion, Amazon.com, Coco-Cola, Dupont, Electronic Arts, Thermo Fischer Scientific, Verizon, and Western Digital. On the macro calendar front, North American market hours will see the release of US preliminary GDP and Initial Jobless Claims data. 

Trading Perspective: Broad-based risk aversion and dovish cues from the international market suggest Wall Street is likely to see subdued opening today. While earnings reports may continue to dominate Wall Street activity, the long term sentiment will be influenced by the release of preliminary GDP data as it will help gain a better picture following comments from US Fed policy meet press conference yesterday. 

EUR/USD: The pair remained under pressure across today’s trading session on broad-based dovish cues. However, strong support near 1.10 handle keeps the pair confined in tight range-bound price action. Traders now await US data for short term profit opportunities. 

GBP/USD: The pair is trading positive in the late European session as Bank of England kept interest rates unchanged despite the recent spike in concern surrounding possible rate cut move. However, gains are capped on caution ahead of the looming Brexit line, keeping price capped below 1.31 handle. Traders await fresh headlines from the UK for directional bias and US data for profit opportunities. 

USD/CAD: The pair is trading with clear bullish directional bias as virus outbreak woes keep USD underpinned fundamentally. The decline in crude oil price weighs down Canadian Loonie while rising US bond yields and broad-based risk currency sell-off underpins Loonie pushing the price of the pair to fresh 7-week highs. Traders now await US GDP for short term profit opportunities.

Please feel free to share your thoughts with us in the comments below. 

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