Sea of red in stocks amid outbreak of SARS-like virus

Global stocks declined today as the market continued to worry about a new virus that is spreading fast in China. The new virus, that has similar features to the severe acute respiratory syndrome (SARS) that killed almost a thousand people. The market is concerned that the virus could have negative implications for the Chinese and Asian economies. Airlines and hospitality shares were the worst performers. In Hong Kong, the Hang Seng index lost 2.8% of its value. This is a day after Moody’s downgraded Hong Kong’s credit rating. In mainland China, the Shanghai composite index declined by 45 points. In Japan, the Nikkei index declined by 220 points. In Europe, the CAC and DAX declined by 45 and 20 points respectively. In the United States, futures tied to the Dow and Nasdaq declined by 50 and 35 points respectively.

The sterling jumped today as the market reacted to the positive November job numbers from the United Kingdom. The unemployment rate remained unchanged at 3.8%. The average earnings plus bonus remained unchanged at 3.2%. The claimant count remained unchanged at 14.9k. This was slightly better than the consensus estimates of 22.6k. The three-month moving average increased by 208k. This was the highest increase since March 2019. The positive data come at a time when traders are thinking the Bank of England (BOE) will slash interest rates. This is because recent CPI and GDP data have been weaker than expected.

The euro rose today after the market received positive survey data from the European Union. The January ZEW sentiment rose to 25.6 from the previous 11.2. This was the highest level since February 2018. The same positive trend was seen in Germany. The economic sentiment in Germany rose to 26.7 from the previous 10.7. This was the highest level since 2015. The ZEW current conditions improved to -9.5 from the previous -19.9. These numbers seem to confirm that the European Union economy is improving. 

EUR/USD

The EUR/USD pair rose by 15 basis points today in reaction to the positive survey data from Europe. The pair reached an intraday high of 1.1110, which is the highest level since Friday. The price is above the 14-day and 28-day exponential moving averages on the hourly chart. The RSI has been moving upwards and today, it reached a high of 68. The pair may continue moving higher during the American session.

GBP/USD

The GBP/USD pair rose sharply today as the market reacted to positive jobs data from the United Kingdom. The pair rose from an intraday low of 1.2995 to a high of 1.3075. The price is above the 61.8% Fibonacci Retracement level. It is also above the 14-day and 28-day exponential moving averages. The RSI remains above the overbought level of 70 while the signal line of the MACD has been rising. The pair may continue with the upward trend during the American session.

USD/CHF

The USD/CHF pair declined to an intraday low of 0.9660. This was from the yesterday’s high of 0.9700. The price is slightly below the 14-day and 28-day exponential moving averages. The two averages have made a bearish crossover. The RSI has been moving downwards from a high of 75 to the current level of 35. The pair may continue moving lower during the American session.