News

Stocks Futures Trim Losses as PBOC Intervenes to Offset Coronavirus Effects

Equities

US stock index futures bounced off the lows as PBOC measures eased investors' woes. The risk sentiment was hit hard lately by the Coronavirus outbreak. The Chinese stock market was back on today after an extended lunar New Year holiday, and the People Bank of China took measures to lessen the negative effect caused by the epidemic. The Bank lowered reverse repo rates and injected liquidity into markets to avoid further deterioration of economic growth. US stock-index futures cheered the measures, the Dow Jones Industrial Average futures rose to 28432, the S&P500 futures recovered to 3247, and Nasdaq rallied to 9092. Meanwhile, the Shanghai composite settled almost 7.7% lower at 2746, rebounding from a one-year low of 2716.

USD

The dollar index, which measures the greenback against a basket of major currencies, recovered from a two-week low of 97.35 to 97.63 following People Bank of China measures. The bank adjusted the reverse repo rate and injected liquidity in the market to avoid collapse as the Chinese markets resumed trading. The USDCNY soared to a two-month high of 7.0248. On the other hand, market participants are looking forward to the ISM Manufacturing PMI of January for further insight into the economic activity.

Metals

Gold prices reversed from a one-month high on PBOC actions. The adopted measures served in restoring risk sentiment and supported risky assets to trim losses. As a result, the price of a gold ounce dipped to $1573 after trading at a high of $1592, and the price of a silver ounce declined to $17.71. Meanwhile, palladium continued to trade in a tight range between $2150 and $2257.

Oil

Oil prices held steady near a thirteen-month low awaiting fresh drivers. The West Texas Intermediate crude futures dipped to $50.61, and Brent futures declined to $55.46. The spread between WTI and Brent fell to a one-month low of $4.73. Market participants are worried about the consequences of the coronavirus outbreak on the global economic growth, and how oil demand level will be affected.

Major Economic Events

GMT Country Event Expectation Previous

9:30

UK

Manufacturing PMI (Jan)

49.8

47.5

15:00

US

ISM Manufacturing PMI (Jan)

48.5

47.2


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