How the coronavirus affects the global financial markets - Grand Union Markets Forex
How the coronavirus affects the global financial markets - Grand Union Markets Forex review
Grand union markets broker experts explain in which way the epidemic is affecting the global financial markets.
A new global threat, the COVID-19 coronavirus, emerged in December 2019. This virus is like the influenza virus, but it has a higher infection rate and a higher mortality rate. The epidemic began in the Chinese city of Wuhan and quickly spread beyond its borders. To date, more than 2,000 people have died, another 75,000 have been infected. In this article, Grand union markets broker experts explain in which way the epidemic is affecting the global financial markets.
To understand the situation better, let's look at critical steps in the viral development timeline in early 2020.
January 11: Wuhan city authorities report the first death of the virus.
January 20: The first confirmed cases of coronavirus disease outside mainland China are in Japan, South Korea, and Thailand.
January 23: Land and air communication with Wuhan is entirely closed, the railway does not work.
January 26: Officials of the Special Medical Commission of China announced that the spread of the coronavirus may continue.
January 30: The World Health Organization issues a warning as the epidemic goes beyond China.
February 7: Li Wenliang, the Chinese doctor who first reported the danger of a new deadly epidemic, dies because of a coronavirus.
February 9: Coronavirus death toll exceeds deaths from atypical pneumonia in 2002-2003.
First, according to experts in Grand union markets broker, the coronavirus outbreak has affected the Chinese economy. Wuhan City, which has become the center of the epidemic, is one of China's leading industrial centers. Its blockade cannot go unnoticed by the Chinese economy. A Reuters survey of leading economists shows that China's economic growth forecast fell from 6% to 4.5% in the first quarter of 2020, which is directly related to the coronavirus outbreak.
This is just the beginning of the domino effect, according to the Grand union markets broker review. Weeks earlier, the stock market dropped sharply - the company lowered its forecast for quarterly earnings due to the outbreak of the virus and the fall in production. The profit will have to be reduced by many companies, but it is too early to make accurate forecasts. According to recent reports, the number of new cases in China has declined, giving rise to optimistic estimates. The pessimists, however, claim that the epidemic has not yet reached its peak.
One of the popular topics for discussion, including the grandunion-markets.com site reviews, is the economic recession of the V-type: a sharp, steady decline, a reversal of the trend at the bottom, and the same sharp recovery. Current events in the stock markets suggest that the v-shaped recovery of the global economy after the epidemic has not yet begun and would be a question of months if not years. The outbreak of the pandemic is also discovered in South Korea; there are cases in Iran and Italy. There’s not much hope left that these countries will be able to prevent the spread of the epidemic, even if the outbreak in China goes down. Too many movies have been filmed about after the blockade of the infection: focused in one place, it immediately erupted in another. Most likely, the optimistic V-scenario of economic recovery will change to a moderate letter U, and in the worst case, the letter L, say Grand union markets forex experts.
Against this background, there is a decline in turnover in all global financial markets. The government bonds market has not been euphoric since the signing of the US-China trade agreement, continue analyzing Grand union markets forex experts. The course of German securities is slowly but surely going down, and now the Netherlands has joined them. At the same time, even Greece and Italy were able to raise the yield on ten-year bonds to one percent. The yield on thirty-year US bonds fell to an absolute minimum of 1.88%. The state bonds of Australia and New Zealand are in no better situation: relationships with China hurt the exchange rate of securities for both of those countries.
The stock market has also seen a downturn, which means that investors are once again focusing on safe assets: metals, high-level government securities, and energy sector stocks. This is not surprising, note Grand union markets broker. The Japanese market was closed on the Emperor's birthday, so overall trading liquidity was critically low.
Meanwhile, the US market is not focused on the coronavirus, but on a campaign that has started. Bernie Sanders won in Nevada, but according to the Grand union markets review, this does not predict the outcome of the presidential election. The chance of winning for a candidate who supports raising taxes is minimal. As Democrats have no way of nominating another candidate who can compete with Donald Trump, markets will have to get used to the fact that the world's first redheaded president can stay for a second term. So, the market should be ready for new trade wars and a trillion-dollar deficit. If the coronavirus does not exist, it would have adversely affected the dollar, but the redistribution of investors' interests supports the US currency, writes Grand union markets review.
By the end of February, Hong Kong will announce its 2020 budget and GDP figures in the fourth quarter - a 3% decline. Not much, taking into account the recent protests in Hong Kong. But the budget of Singapore is already affected by coronavirus - the revenue item is reduced. On such a disappointing background, any more positive news will be perceived as a victory in the financial markets.
Grand union markets broker review experts analyzed how the coronavirus epidemic affected the global financial markets and the value of its significant investment assets. Let's start from the market which is most important for theGrand union markets broker - forex market. The currency market is always very responsive to the situation in the world, and when it comes to global events, the reaction can be brutal, up to the statements that all the brokers like Grand union markets are a scam because of high-volatile market movements. During such events a lot of traders can lose their investments.
EUR / USD
Since the beginning of the year, the euro has not performed well. At first, the disappointing results of the 2019 ZEW review appeared. This German source clearly pointed to a decline in the confidence of German investors. And the dollar, on the contrary, received support - the Federal Reserve did not change the key interest rate against the background of real data on the state of the US economy. News about the coronavirus is affecting the euro more - the eurozone's economy is heavily dependent on Chinese exports. So for the euro, the coronavirus is a negative factor, summarizes the Grand union markets review.
AUD / USD
China is the largest trading partner for Australia, so all news from China affects the Australian dollar. Since the Chinese renminbi currency can only trade within the artificial corridor, investors often use the Australian dollar to trade with China. Therefore, the reputation of a risky asset, which is best avoided in times of volatility, has strengthened the Australian dollar. Negative news on coronavirus will lead to a further rate decline, says Grand union markets forex broker.
USD / JPY, cryptocurrencies, gold
The Japanese yen against the dollar gradually strengthened. Japan is the largest nation of creditors, so the Japanese yen tops the list of relatively safe assets. Other safe assets are the US dollar, Swiss franc, and gold. From all this list, in times of panic, investors prefer gold. Gold prices are now at their highest. By the way, one can also remember crypto but do not take it too seriously. As in the case of brokers market and also Grand union markets broker, scam cryptocurrencies had become the major problem back in 2018 when a number of investors thought of them as a reliable profit source. Although skeptics have almost buried the cryptocurrency market as soon as the market is covered by another wave of panic, Bitcoin has again moved up.
USD / CAD
The Canadian dollar is a risk-sensitive currency, so it went down because of the corona-news and falling oil prices. Canada is one of the largest oil producers in the world, so the Canadian dollar is sensitive to fluctuations in the oil price as well. As soon as news of the coronavirus goes down, and the oil price begins to recover, the Canadian dollar will also play its part. You can read the story about this at any website like grandunion-markets.com, reviews and articles have a lot information to show you.
Wall Street has been on the decline ever since legions of epidemiologists acknowledged that coronavirus is not just a Chinese problem. Money is flowing into the government bond sector, while indices are falling: S&P 500 fell 1.05%, Nasdaq down 1.80%, and Dow Jones -0.80%. So far, it is unlikely that relief is coming soon: new coronavirus clusters continue to emerge around the world.
While the Japan celebrates the Emperor's birthday, the stock indices of South Korea, Hong Kong, Australia, and New Zealand are falling. On such a background, the Shanghai Composite Index looks relatively good, but it also fell by 0.5%, writes Grand union markets broker.
The situation is not better with European indices. In Northern Italy, an outbreak of the virus has been recorded, with an estimated 50,000 people infected. Most likely, the next week for European stocks will be negative, followed by similar trends in Asia.
The US dollar declined slightly relative to other major currencies as the Treasury bonds and stock indexes fell. Besides, investors' interest in the yen and the Swiss franc weakened the dollar. However, for secondary currencies, the dollar has grown significantly. The markets of developing countries are more prone to volatility due to the coronavirus outbreak, so their currencies are weakening against the dollar. According to experts of Grand union markets, scam companies have already started to activate the most wild scenarios based on world panic in those market sectors.
In emerging markets, dollar bonds are considered reliable assets. With the current volatility of the world market, they can provide the US currency with a stable exchange rate throughout 2020, despite concerns of the Federal Reserve. Given this fact, as well as the coronavirus outbreak in Italy, we can assume that the growth of the euro and the pound will be limited.
Petroleum currencies - the Norwegian krone, the Russian ruble, and the Mexican peso - are going through a difficult period associated with falling oil prices.
Coronavirus also affected the oil prices. Due to the spread of the epidemic, demand for petroleum products is expected to decline, with a decline in industrial production in China, a reduction in transportation costs due to the no-tourist season, and other reasons. By the way, in this issue, it is worth paying attention to the position of OPEC - the cartel of oil-producing countries. OPEC now believes that the effect of the coronavirus will be temporary. But if the downturn in the market worsens, OPEC will have to revise oil production downward to maintain price urgently.
Of course, after such a sharp downturn is the small but inevitable rollback is quite real, so that the fall will soon end. New reports on the coronavirus spread may trigger a further drop in oil prices.
And gold is rising, against the backdrop of such a decline in its core assets - panic is always driving demand for precious metals. So, both the coronavirus epidemic and the dwindling hopes of a V-type recovery are attracting investors to reserve assets. There is a reason to believe that gold will continue to rise in price until the panic around the coronavirus subsides, and the market recovers.