Chinese virus dampens market sentiment
|Global stocks are on the slide, with fear over the impact of the coronavirus that is spreading throughout China. A strong UK jobs report has helped push the pound higher. Meanwhile, plans for a US middle class tax cut is strengthening the case for US outperformance under Trump.
- Asian virus sparks risk-off sentiment
- GBP strengthens after fall in UK claimants for December
- US outperformance to continue if Trump enacts another tax cut
US markets have followed their Asian and European counterparts lower today, after fears over a burgeoning health crisis in China raised question marks over the potential impact on global trade. Markets such as copper and the Chinese Yuan have taken it particularly hard, and the worry is that we could see this Coronavirus spread rapidly over a long weekend that is expected to see three-billion people travel to celebrate the Lunar New Year.
A strengthening pound has provided yet another reason for traders to sell the FTSE today, with a batch of improved jobs data points lessening the chance of a BoE rate cut. Coming at a time where rate cut calls have grown louder, the sharp decline in December claimants highlights a reason for the BoE to hold off for now.
Trump’s Davos appearance today seemed to be as much about patting himself on the back as anything. However, we are seeing a shift in tone towards the next big market boost, with Steve Mnuchin laying out their plan to provide a tax cut for the middle class at the next budget. With the 2020 election looming, cynics will simply see this as a way to buy votes. However, from a market perspective, the prospect of a sharp ramp up in disposable income provides yet another reason to expect US outperformance under Trump.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.