What a week we had - worst week for equities since 2008, and a high for the year for Gold. What were the reasons? - Mainly the spread of corona virus across the world and particularly Italy. Still not at the pandemic level, but the panic is evident everywhere - from financial markets to your local pharmacy or supermarket. Is this panic justified? For a virus which is similar to your general flu, with slightly higher death rate, the answer may be no. That being said, yet again the Central Banks are pledging support for the economy and providing some relief for traders earlier today. And again the question - Is this justified?
SP500 Futures Daily Chart
Preliminary US GDP Q4 (QoQ) came in as expected at 2.1% last week. Canadian GDP for December beat estimates at 0.3% vs the expected 0.1%. These numbers are for periods when the virus still wasn't a headline.
The more interesting data came from China where Manufacturing PMI for February showed just how much the virus impacted their economy. Coming in at 35.7 it recorded a record low.
Therefore it seems that a Central Bank reaction towards problems with the economy would be more justified in China, rather than elsewhere. If policy changes in US and Europe, it would be more of a try to support stock markets rather than the economy.
With all this being said this week we have data coming up this week for the month of February which can hint whether other economies are affected by the virus.
German and UK Manufacturing PMIs for February are being released today. The US ISM Manufacturing PMI will follow them later during the day.
On Wednesday we have some Non-Manufacturing PMIs for February:
UK Composite PMI(Feb) and Services PMI(Feb)
US ISM Non-Manufacturing PMI(Feb).
For all traders that follow the AUD, it will be a busy week. RBA Interest Rate Decision, GDP and Retail Sales figures are to be released.
And finally, it is that time of the month - on Friday we will receive the US Non-farm Payrolls for February.