Major Drops In Equity Markets As Coronavirus Measures Fail | Oil Under Pressure

Major Drops In Equity Markets As Coronavirus Measures Fail | Oil Under Pressure

One threat subsides another takes over. Market participants over in Europe have grave concerns about Coronavirus as the death toll increased to 80 and more than 2700 victims infected in China. Chinese officials believe that 461 individuals are in a critical situation. The pace of the spread is extensively high, the Centre for Disease Control and Prevention in the United States has confirmed five cases over in Arizona, Singapore, and South Korea have also confirmed four and three patients infected with this virus respectively. The bottom line is that the virus has become deadly and it has caused a major panic in markets.

The fact that the Chinese authorities have failed to contain the virus has pushed the US futures are significantly lower today. Both the S&P 500 and the Dow Jones futures have opened with a massive gap to the downside. Remember, the S&P500 recorded its worst weekly loss on Friday since August. The S&P500 index closed with a loss of 0.90%, the Dow Jones fell by 0.58% and the NASDAQ lost its value by 0.93% on Friday. We also saw the value of small caps tumbling, the Russell 2000 index plunged by 1.35%. On the other hand, the VIX index surged more than 12% and it closed at 14.56.

Johnson in Perilous Situation

The UK’s Prime Minister has decided to test the waters–his friendship with the president of the United States. It is anticipated that Huawei will be allowed to participate in the development of the country’s 5G network despite the fact that Trump has advised against it.

Mr. Jonhnson is in a perilous situation because the banning of the company shakes the relationship of the UK with China and hinders the development of technology in the country. If he allows Huawei, his relationship with the most powerful person in the world becomes shaky and triggers backlashes from Trump. The UK needs the US more than ever because if Jonshon succeeds in forging a deal with the US, it could use this leverage to bend other countries to form a deal in its favour.

Oil: Saudis Closely Watching The Situation

In the commodity markets, oil is also trading lower due to the deepening fears of Coronavirus and its economic impact. The reality is that shocks to the Chinese economy always have ripple effects and the commodity markets are deeply affected by it. In simple terms, when economic engines start to grind, the demand for fuel falls. Saudi Arabia, the largest producer of oil has confirmed that it is closely watching the situation but didn’t confirm any intervention if there is any excess supply. Crude and Brent prices have plunged more 2% today and the officials extending the Lunar New Year holidays have made the situation only worse.

Major Drops In Equity Markets As Coronavirus Measures Fail | Oil Under Pressure

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