Tuesday 25th February: Coronavirus continues to rule Asian markets.

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Global Markets:

  • Asian Stock Markets : Nikkei down 3.34%, Shanghai Composite down 0.60%, Hang Seng up 0.04%, ASX down 1.60%
  • Commodities : Gold at $1638.15 (-2.29%), Silver at $18.29 (-3.09%), Brent Oil at $56.34 (+1.02%), WTI Oil at $51.95 (+1.01%)
  • Rates : US 10-year yield at 1.396, UK 10-year yield at 0.540, Germany 10-year yield at -0.471

News & Data:

  • (EUR) German Ifo Business Climate 96.1 vs 95 expected
  • Brexit: EU set to agree UK trade talks mandate
  • Fed’s Mester says rate cut unnecessary to offset virus risks
  • PBoC Fixes USDCNY Reference Rate At 7.0232

Markets Update:

Asian stock markets are mostly lower on Tuesday, extending losses from the previous session following the following the weak cues overnight from Wall Street amid fears the coronavirus outbreak could escalate into a pandemic and derail global economic growth.

Stocks in Japan saw sharp declines on Tuesday afternoon following an overnight plunge on Wall Street as fears of the economic impact from the coronavirus outbreak spread. Returning from a Monday holiday, the Nikkei 225 plunged 4% in early trade, before easing to losses of 3.3% as shares of index heavyweight Fast Retailing dropped more than 4%.

Shares in mainland China were lower – although they crept back up to narrow losses, with the Shanghai composite dropping 0.6%. The Hang Seng index in Hong Kong shed earlier gains to trade flat. Meanwhile, shares in Australia declined as the S&P/ASX 200 fell 1.6%.

The rush to bonds left yields on 10-year Treasury notes at 1.39%, down almost 20 basis points in just three sessions and paying less than overnight rates. Yields were now rapidly approaching the all-time low of 1.321% hit in July 2016. The sharp drop, combined with the simple fact the Fed had far more room to cut rates than its peers, kept the U.S. dollar restrained after a run of strong gains.

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 99.217 after touching highs around 99.6 yesterday. Oil steadied after shedding nearly 4% on Monday.

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