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.
This material is a marketing communication and shall not in any case be construed as an investment advice, investment recommendation or presentation of an investment strategy. The marketing communication is prepared without taking into consideration the individual investors personal circumstances, investment experience or current financial situation. Any information contained therein in regards to past performance or future forecasts does not constitute a reliable indicator of future performance, as circumstances may change over time. Scope Markets shall not accept any responsibility for any losses of investors due to the use and the content of the abovementioned information. Please note that forex trading and trading in other leveraged products involves a significant level of risk and is not suitable for all investors.
Recommended Content
Editors’ Picks
EUR/USD trades weak below 1.0800 amid Good Friday lull, ahead of US PCE
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair keenly awaits the US PCE inflation data and Fed Chair Powell's speech for fresh hints on next week's price action.
GBP/USD holds steady above 1.2600 as markets stay calm on Good Friday
GBP/USD trades sideways above 1.2600 amid a typical Good Friday trading lull. A broadly firmer US Dollar could keep any upside attempts limited in the pair ahead of the US PCE inflation data and Fed Chair Powell's appearance.
Gold price sits at all-time highs above $2,230, US PCE eyed
Gold price hit all-time highs at $2,236 on Thursday to finish Q1 2024 with a bang. Most major world markets, including the US are closed due to Holy Friday, leaving volatility around Gold price highly subdued. US PCE inflation and Powell are awaited.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
Key events in developed markets next week
Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.