Fears take precedence over markets earlier this week, with the coronavirus situation still dominating the headlines around the world.
As you might expect, the virus is spreading further and further with the passage of time and the uncertainty surrounding it definitely stops investors from taking risky moves.
Moreover, looking ahead to the European session, there is not much news that can move things around, so I expect the optimist to remain suppressed for the time being.
But we are still looking for any positive news that will give some hope to traders. Also, look out for corporate results this week as the big tech companies come. This will certainly have an impact.
The indices started with gaps down, and I expect the negative sentiment to spread to Europe, where stocks start the week down.
US stock index futures are at very appetizing levels for purchases, close to 200 periodically on 4-hour charts, as well as multiple diagonal and horizontal supports.
It is interesting to see if the buy-the-dip attitude will remain in vogue. Contrary to them (no surprises here), gold recorded a very strong start to the session, jumping to $ 1,586.
The US bond market remains in focus, suggesting even greater avoidance of risky assets from cash flows. This makes me think that market volatility will start to react to what is happening and increase. In my observations, the bond markets never believed in the topic of reflation, which many economists refer to as the main title for 2020. If we look at the US curve against German bonds, or even the copper / gold ratio, markets think that reflation is just a dream, and instead, we may be overly optimistic about the story of global growth.
We know that the FOMC meeting is this week, and while no one expects a change in interest rates, we expect Jerome Powell to be torn apart by Fed balance sheet issues and measures taken to support the repo market. Risky markets such as stock markets were backed by a surplus of reserves, which, despite calls for the Fed to back it, the market accepted these changes as QEs and that may be over – or should I say, the growth of reserves will soon shrink.
.CPI data for the last quarter of last year in Australia and the BoE meeting will also receive serious attention from market players
Trader Aleksandar Kumanov