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Health fears hit equity markets, oil tanks

The concerns about coronavirus are growing, hence why stocks are in the red this afternoon.


The death toll in China has increased and there are nearly 600 cases of the infection in the country. A case has been confirmed in Singapore, it was announced a short while ago that a few people in Scotland are being tested for coronavirus. It would appear the situating is getting worse, which is why traders are becoming more fearful. Stocks are under pressure as dealers are worried the health crisis will dent economic activity.

ASOS performed well in the final four months of 2019 as revenue increased by 20%, and traders were expecting growth of 15%. In previous updates the US as well as the European division didn’t perform so well, but the units are now showing signs of recovery as sales in increased by 20% and 22% respectively. The high street is under increasing pressure from online firms like ASOS, and it would appear the e-commerce firm is well positioned to take advantage of the changes in consumer behaviours.

Petropavlovsk shares are higher on the session thanks to a robust update. The mining company confirmed that gold sales rose by 39% to 514,000 ounces in 2019. The firm had a stellar final-quarter as sales surged by 90.4%. Looking ahead to 2020, the out is optimistic as the miner is aiming to ramp up production to 620,000-720,000 ounces. The news sent the stock to a level last seen over five years ago, and should the bullish move continue, it might target 16.1p.

Renishaw shares are showing decent gains thanks to the upgrade from Morgan Stanley. The Wall Street titan upped its outlook on the stock to ‘overweight’ from ‘equal weight’. The price target was given a sizeable hike as it is now 4,500p, and the old target was 2,850p.

Renault shares have been hit by a double downgrade. Citigroup lowered their ratings for the company to ‘sell’ from ‘neutral’ and the bank slashed their price target to €30 from €52. The French car manufacturer was also impacted by Barclays lowering of their price target from €59 to €45.              


Equity benchmarks are showing small losses as the coronavirus fears has dampened the mood on Wall Street. The woes associated with the health crisis are being used as an excuse to take some money off the table. The S&P 500 registered a new high yesterday so it’s hardly a surprise the bullish mood has faded a little given the deepening of the health crisis. The jobless claims report rose to 211,000 from 204,000, but in the grand scheme of things, the new rate is still reasonably low.   

Intel share price hit its highest level since the dotcom era as traders are clearly bullish on the stock ahead of the fourth-quarter figures being released tonight after the market close. The company’s third-quarter update in October was well received. Revenue was $19.19 billion, topping the $18.05 billion forecast and EPS was $1.42, which easily exceeded the $1.24 forecast. The full-year guidance was raised too, and the optimistic outlook was all the more impressive seeing as firms like Texas Instruments issued downbeat guidance’s.

Comcast released solid fourth-quarter results but, the stock is slightly lower. EPS was 79 cents, and traders were expecting 76 cents. Revenue came in at $28.39, topping forecasts. There was a net increase of high-speed internet customers of 442,000, and the consensus estimate was 378,000. On a yearly basis the divided was hiked by 10%. The share price hit a record-high last week so it would seem a lot of the positive news was already factored in.        


EUR/USD is in the red following the update from the European Central Bank. Rates were kept on hold, meeting forecasts.  Christine Lagarde, the ECB chief, claimed that risks to the growth outlook ‘remain to the downside’ but are now less pronounced. In relation to monetary policy the central banker claimed a ‘highly accommodative stance’ is required for a ‘prolonged period’. The central will launch a strategic review of their objectives and policy tools. Details are expected later today.

GBP/USD has been hurt by the broad push higher in the greenback. It was been a quiet day in terms of UK economic news. Sterling had a positive run for the past three sessions, so now we are seeing a little pullback. 


Gold is in demand on the back of the flight-to-quality effect. Stocks around the globe have lost ground due to the coronavirus, and in turn we have seen funds being poured into gold as it is deemed to be a lower risk asset. A move higher in the US dollar would typically weigh on gold but not today, which is a testament to the metal’s strength.     

WTI and Brent crude are sharply lower as traders are worried about China’s demand in light of the health crisis in the country. China is the largest importer of oil in the world so a negative economic impact because of coronavirus could weaken demand. According to the Energy Information Administration report, oil inventories only fell by 405,000 barrels while traders were expecting a draw of 1 million barrels. Gasoline stockpiles grew by 1.7 million barrels, but the consensus estimate was for a rise of 3.09 million barrels 


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