Global stocks regained the upside momentum on Wednesday as investors have digested the downbeat warning from Apple. Asian markets finished in the green, with European bourses following suit and US stock index futures pointing to positive start on Wall Street. The pan-European Stoxx 600 gains 0.67% while Dow futures indicating a modest rise by about 60 points at the open.
Market participants cheer the reports that the spread of China coronavirus has been slowing gradually for a second day in a row. Still, as the death toll continues to grow, it’s too early to predict that the worst is over. Moreover, the negative spillover from the virus on the global economy started to emerge already and will likely hit business activity in the first quarter. As such, the latest ZEW survey showed that German investor sentiment deteriorated dramatically in February, adding to the gloomy picture surrounding the Europe’s largest economy.
As the dismal figures continue to emerge out of the Eurozone, EURUSD plunged to three-year lows below 1.08 and remains under the intense selling pressure. Of note, the euro shrugs off the dynamics in risk sentiment these days, as demand for high-yielding assets fails to attract buyers despite the current low levels. That is primarily because the economic divergence between the Eurozone and the US stands as the key bearish driver for the common currency. The latest series of American data suggest the country’s economy is on a fairly strong footing and doesn’t need additional stimulus from the Federal Reserve at this stage.
Meanwhile, Brent crude refreshed late-January highs just below $58.70 following a successful break above the $58 handle. The futures extend the recovery from a low of $53 for a seventh day in a row, with the $60 psychological level is back on traders’ radar. Oil bulls received a boost from the decision by the US authorities to impose sanctions on Russia’s Rosneft subsidiary for supporting the Maduro regime. Also, the market is lifted by China stimulus hopes amid the spreading of the coronavirus and by the fact that cease-fire talks were suspended in Libya. Still, Brent may struggle to gain further due to a strong dollar and the lingering uncertainty surrounding the OPEC+ decision on additional output cuts.