Risk Aversion Leads The Market

BBVA Research / U.S. stock exchanges reopened after President’s Day holidays, in an environment where markets traded in a risk–off mood fashion. Apple Announced forecasts for 1Q20 sales are not going to fulfill expectations amid coronavirus impact, while its share value dropped 2.13 %. Furthermore, HSBC also warned about the impact of the coronavirus on its Asia business. In this context, investors sought shelter in safe-haven assets, while equities halted their rally trend.

Nonetheless, China reported a slowdown in coronavirus deaths and infections. For the first time since end of January, the number of new infected dropped below 2,000 while the death toll fell for the first time since last Tuesday, below 100. However, the WHO suggested caution, as the virus is still breaking out locally and globally.

U.S. manufacturing business activity grew sharply in February, while economic sentiment in Germany disappointed. The assessment of the economic situation in Germany worsened in February ( -15.7%; Cons: 10.0% ; Prev: -9.5%) and the ZEW Indicator of Economic Sentiment for Germany decreased sharply (8.7%; Cons: 21.5% ; Prev: 26.7%), due to the worldwide effects of the coronavirus. The financial market experts’ expectations regarding the economic development in the Eurozone have experienced a slightly less pronounced drop than those for Germany (10.4%; Prev: 25.6%). On the other hand, U.S. Empire Manufacturing survey soared (12.9%; Cons5.0 %; Prev: 4.8%) driven by the sharp Increase both in orders and shipments, while it seems that COVID-19 has had a mute impact in the Empire Manufacturing survey.