Markets rally after expert calls potential coronavirus peak

Top medical expert Zhong Nanshan has speculated that the coronavirus could peak this month, with markets reacting with optimism as a result. Meanwhile, the RBNZ sends the NZD higher after keeping rates steady.

- Coronavirus fears ease, helping boost stocks
- Commodities regain ground, with medical expert speculating potential February peak
- NZD rebounds as RBNZ predicts stable 2020

European markets are on the rise today, with traders emboldened by an optimistic outlook from the top Chinese medical expert, Zhong Nanshan. Nanshan speculated that the epidemic could peak by the end of February, with a slowdown in cases providing reason for optimism. Interestingly, he also allayed fears over the incubation period, with scientists only finding one case of a 24-day period.

Commodity-focused firms are on the front foot today, with traders heading towards China-focused firms amid a tentative wave of optimism that the coronavirus crisis could have peaked. For traders, there will be many seeking to pick the market bottom given the expectation that this crisis will be limited in nature. That is the case across the board, with heavily-hit markets such as the Australian dollar, Chinese Yuan, iron ore, copper, and China-focused stocks all coming into favour. A decline in the number of reported cases in China led some to believe we could have turned a corner, yet the market impact remains highly uncertain given the lack of clarity over exactly how much Chinese growth will suffer as a result. There are also fears that the virus could be left to spread unchallenged in regions such as Africa and South America given a lack of infrastructure and testing in comparison to more developed nations. For traders, there will be many seeking to pick the market bottom given the expectation that this crisis will be limited in nature.

The New Zealand dollar was the big mover overnight, with the RBNZ rate hold helping to drive a sharp move higher for the currency. For the most part, the gains have been a reflection of the outlook for a stable rate throughout 2020. Despite global fears over coronavirus, the country has seen little impact yet. The question now is whether this is a template for the likes of the RBA, where fears of a China-driven slowdown are cast aside for now. 

Ahead of the open we expect the Dow Jones to open 107 points higher, at 29,383.