February closed out with the worst week of trading since the financial crisis – will the start of March provide a road to recovery, or more coronavirus carnage?
US: Coronavirus fears
Any market-rescuing positive headlines regarding the outbreak itself seem a way off. So the question is, how low is low enough for equities to start to look appealing once again? Similarly, what is the threshold for bad news at the moment – as in, would the declaration of a pandemic by the World Health Organisation spark even greater losses, or has that been priced in already?
From a market perspective, an explosion of cases in the US would likely be the most catastrophic turn the illness could take in the coming weeks. Though that’s not to downplay the impact of the steadily increasing number of nations around the world now seeing their first cases of the coronavirus, each new country pushing us closer to a pandemic.
If that wasn’t enough, from March onwards each piece of data is going to more accurately reflect the economic impact of the coronavirus. If anything that might be where a tourniquet is found, if said figures can outperform rock bottom expectations.
With that in mind, Monday brings a whole host of manufacturing PMIs, most crucially the Caixin number out of China at 1.45am – likely to help set of the tone of trading at the start of the week – and the US ISM reading later in the afternoon.
Wednesday then sees the services PMIs, again with the Caixin figure in the early hours of the day and the US number in the afternoon, while Thursday has the American factory orders data.
Finally on Friday there’s the nonfarm jobs report covering February – an early indicator, perhaps, of any coronavirus impact felt by USA.
UK: More Coronavirus fears
While the FTSE is going to, obviously, be focused on the global coronavirus fears – the UK manufacturing and services PMIs are also on Monday and Wednesday respectively – the pound is going to be keeping an eye on the first week of trade negotiations between the UK and EU.
There has already been a huge amount of animosity generated between the two sides already, with the UK threatening to walk away in June if sufficient progress isn’t made in order to prepare for a calm exit by the end of the year.
Like is has been since 2020 began, sterling is going to be sensitive to any headlines tracking the state of play between the former friends.
Eurozone: And yes, more Coronavirus fears
Trading is rather homogenous at the moment, meaning the Eurozone indices will likely move in the same direction as the FTSE and the Dow Jones. In terms of data, the manufacturing and services PMIs arrive on Monday and Wednesday, with the region-wide inflation numbers on Tuesday and German factory orders on Friday.
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