Coronavirus officially called a pandemic, unexpected rate cut by BoE. Donald Trump did not maintain optimism in the markets
Today’s European session was rather weak, one cannot find a stock market with solid gains. DAX fell 0.35% and other major indices finished with declines as well. The pessimism is more vivid in the U.S. as the American equities are falling over 4%. The drop got even worse after the WHO’s statement that declared pandemic effects.
The economic calendar brought us some crucial macro data but the main event of the day came unexpectedly. The Bank of England decided to cut the key interest rate by 50ps to 0.25% in the morning. A move that is supposed to help the economy amid coronavirus crisis, was not expected by the markets. The FTSE 100 opened higher as a response to the news, yet it did not manage to maintain the early gains and finished 1.40% lower. The sterling failed to strengthen as well.
Apart from that, the UK published its recent GDP figures. The British economy turned out to stagnate in the three months to January. It is the third successive three-month period when GDP is at 0.0%. On the other hand, the manufacturing production in the UK was in line with expectations as it rose 0.2% in January. Apart from that, the recent EIA’s report suggested a sharp increase in oil inventories held by U.S. firms. Inventories jumped by 7.7 million barrels last week (est. 2.105 million). Still, oil prices did not seem to react to these figures as oil prices slump is generally caused by the oil markets turmoil and coronavirus outbreak.
Tomorrow, investors should primarily focus on the ECB’s interest rate decision (12:45 pm GMT). The European Central Bank now seems to be under pressure following a series of rate cuts around the world. One may also be interested in industrial production figures from the eurozone.
Donald Trump did not maintain optimism in the markets
US indices fell sharply today after 5% gains on Tuesday. Yesterday gains were driven by hopes that US president would meet with the Congress to discuss major fiscal measures. However today the markets seem to be impatient about the lack of details from President Trump’s administration regarding promised fiscal stimulus. To make things worse the American presidentt refused to test for coronavirus after it was confirmed that he had contact with an infected person.
American currency declined as well due to ongoing uncertainties regarding the fiscal stimulus and coronavirus outbreak, while US dollar weakened significantly against Japanese yen and New Zealand dollar.