Market Report 13th February 2020

Market Report 13th February 2020 981 980 Realm

Markets ended higher, as a slowdown in the number of coronavirus cases and the U.S. Federal Reserve chairman’s optimistic view on the economy whetted investor appetite for riskier assets.

China reported its lowest number of new coronavirus cases since late January, supporting its senior medical adviser’s prediction that the outbreak might be over by April.
Meanwhile, Federal Reserve Chair Jerome Powell on Tuesday said the U.S economy is in a good place, leading to a rise in bond yields and lifting sentiment globally.

  • European stocks ended mostly higher on Wednesday amid cautious moves by investors, who continued to track news about the spread of coronavirus in mainland China.
  • US stocks showed a strong move to the upside during trading on Wednesday, adding to the modest gains posted in the previous session. The upward move on the day lifted the major averages to new record closing highs.
  • Asian stocks advanced on Wednesday as anxiety ebbed over the spread of a deadly virus in mainland China and Federal Reserve Chair Jerome Powell told Congress that the U.S. economy is in a good place, despite a potential threat from the coronavirus outbreak in China.

Global Macro

  • The Euro Area industrial production slumped 2.1% from a month earlier in December 2019, after being unchanged in November and compared to market expectations of a 1.6% drop. That was the steepest contraction in the industry sector since February 2016 driven by a 4% plunge in capital goods output. Production also contracted for intermediate (1.7%) and consumer goods (-1.3%), and energy (-0.5%). Among the bloc’s largest economies, France’s industrial output declined by the most in December (-2.9%), followed by Italy (-2.7%), Germany (-2.5%) and Spain (-1.5%).
  • The Baltic index have been trading below 450 in February, the lowest level since March 2016 with the capesize segment falling to all-time lows amid weak demand for ships and muted activity in China, whose demand accounts for almost 40% of total dry seaborne imports. The dry bulk index, which can be an early indicator of slowing global growth, has plunged by over 83% since early September as an 18-month trade war between the US and China and the coronavirus outbreak weighed on exports and manufacturing, while higher fuel costs under the new International Maritime 2020 regulations led to a significant rise in the cost of operating cargo ships. The last time it fell by 90% in just a few months was in 2008 during the Great Recession.
  • Industrial production in the Euro Area plunged 4.1% from a year earlier in December 2019, following a revised 1.7% contraction in the previous month and compared to market forecasts of a 2.3% decline. The latest figure matched the December 2018 drop, which was the biggest since November 2009. Capital goods output led the falls (-6.7%), followed by intermediate goods (-5.5%), energy (-2.3%) and durable consumer goods (-1.4%). Among the bloc’s largest economies, there was a contraction in Germany, Italy and France, while Spain’s output was little changed. Considering 2019 full year, industrial output shrank 1.7%, the steepest contraction since 2012.

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