Doubts Creeping In

A decent batch of surveys from across Europe has done little to settle the nerves on Friday, despite briefly appearing to do so, with stock markets on course to end the week in the red.

For so long, investors have been resilient to the ugly numbers coming out on Wuhan, in relation to the number of cases and deaths from the coronavirus. The belief that the deceleration was underway, that the light is appearing at the end of the tunnel, was good enough for the dip buyers and before long, we were back in record territory.

While the numbers are a constant source of debate, not helped by the constant changes in the criteria for counting them, something investors can't argue with is the warnings that are starting to come from companies. Apple warned earlier this week about the impact of COVID-19 on sales and production and since then, others have made similar warnings. I expect there's plenty more to come in the weeks ahead.

Cases outside of Hubei province have also been relatively limited until now so the spike in South Korea, including another fatality, rattled investors in the region overnight and that appears to have spread across Europe and now the US. A long weekend may now lie ahead.

Coronavirus hits US surveys, Europe survives for now

The PMIs from Europe for February had the potential to be nasty but the reality was very different. Of course, it may take a little longer for the coronavirus to impact businesses there and will be to a lesser extent, but the fact than many of the survey's improved and even surprised to the upside was a pleasant surprise.

The celebrations didn't last long though and as quickly as stocks returned into the green, they were heading south again. This wasn't helped by the US survey's which were hit, at least in part, by the effects of the coronavirus, as the services sector fell into contraction territory.

Best week since August for Gold

Gold is heading for its best week since August as it capitalized on growing insecurity in the stock market to charge through its $1,600 resistance and burst higher. The yellow metal is now testing $1,650 and packing a punch. With investors growing ever more fearful about the corporate fallout of the coronavirus, the path of least resistance for gold looks upwards. It's been quite a strong week though so a little profit taking in the near-term wouldn't be outrageous, with $1,650 possibly offering a logical zone for this.

Oil seeing profit taking after impressive run

It's been another good week for oil prices but the rally quickly fan out of gas after the inventory data on Thursday. The report gave Brent one final kick higher before the profit taking kicked in at $60 and since then its been in paring mode. The more downbeat end to the week isn't helping, with crude slipping more than 1% on Friday. Oil prices have been heavily punished throughout the outbreak though so if we really are in containment mode, traders may become more interested in the dips once again.