The Chinese equity markets return on Monday after the extended Lunar New Year holiday break, diving around 8.7% at the open, as the traders play catch up with the mounting coronavirus concerns in China and across the globe.
Amid the latest coronavirus update, “the number of confirmed cases of the coronavirus worldwide is now 14,557, most of which are in China. This follows last week's emergency warning from the World Health Organization (WHO) ad the data is according to the agency. CNBC reports that the global death toll has risen to at least 304. Reuters reports 350 deaths following 56 new coronavirus deaths in Hubei,” as cited by FXStreet’s Analyst, Ross J Burland.
China’s benchmark index, the Shanghai Composite, re-opened nearly 9% down, gapping to lower to reach 2,716.70, the lowest level since mid-Feb 2019. The index is off the multi-month lows, but still down 7.50% around 2,760 levels, at the time of writing.
The China stocks slump seems to have little impact on the other related markets, leaving the risk sentiment largely unperturbed. This could be possibly due to the pre-emptive measures already rolled out by the Chinese authorities on Sunday. The People’s Bank of China (PBOC) announced to pump 1.2 trillion yuan ($173.8 billion) into the market while it was reported from some sources that China Securities Regulatory Commission (CSRC) had issued a verbal directive to brokerages including Citic Securities Co. and China International Capital Corp. to bar their clients from selling borrowed stocks on Feb. 3.
In additional efforts to counter the negative economic impact of the coronavirus outbreak and spread, the PBOC slashed the interest rate on 7-day reverse repos (RR) to 2.4% from previously at 2.5% and on 14-day RRs to 2.55% vs. 2.65% previous. The PBOC also injected CNY900bn via 7-day RRs and 300bn via 14-day RRs.
On the fx front, The Chinese yuan tumbled to the weakest in five weeks against the greenback, as USD/CNY skyrockets to 6.9945. The cross rallies 0.85% on a daily basis.
The USD/JPY pair extends its rebound above the 108.50 level while S&P 500 futures jump 0.75%. The benchmark US 10-year yields are up 1%, driving the greenback higher across the board. Meanwhile, gold prices are on the back foot below $1590.
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD holds below 1.0750 ahead of key US data
EUR/USD trades in a tight range below 1.0750 in the European session on Friday. The US Dollar struggles to gather strength ahead of key PCE Price Index data, the Fed's preferred gauge of inflation, and helps the pair hold its ground.
USD/JPY stays firm above 156.00 after BoJ Governor Ueda's comments
USD/JPY stays firm above 156.00 after surging above this level on the Bank of Japan's decision to leave the policy settings unchanged. BoJ Governor said weak Yen was not impacting prices but added that they will watch FX developments closely.
Gold price oscillates in a range as the focus remains glued to the US PCE Price Index
Gold price struggles to attract any meaningful buyers amid the emergence of fresh USD buying. Bets that the Fed will keep rates higher for longer amid sticky inflation help revive the USD demand.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
US core PCE inflation set to signal firm price pressures as markets delay Federal Reserve rate cut bets
The core PCE Price Index, which excludes volatile food and energy prices, is seen as the more influential measure of inflation in terms of Fed positioning. The index is forecast to rise 0.3% on a monthly basis in March, matching February’s increase.