We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bearish
Oil - US Crude
Mixed
Wall Street
Bullish
Gold
Mixed
GBP/USD
Bearish
USD/JPY
Bearish
More View more
Breaking news

Federal Reserve Announce $2.3 Trillion in Loans to Support Economy

Real Time News
  • Natural Gas Price Chart Exposes Bearish Signals - Nat Gas Forecast More details in the link below: https://www.dailyfx.com/forex/technical/article/special_report/2020/04/09/Natural-Gas-Price-Chart-Exposes-Bearish-Signals-Nat-Gas-Forecast-MK.html?CHID=9&QPID=917714 https://t.co/Gc2vdB14ha
  • Forex Update: As of 14:00, these are your best and worst performers based on the London trading schedule: 🇦🇺AUD: 1.24% 🇳🇿NZD: 1.01% 🇪🇺EUR: 0.66% 🇨🇦CAD: 0.55% 🇨🇭CHF: 0.50% 🇯🇵JPY: 0.21% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/ezlPWmoQsv
  • Indices Update: As of 14:00, these are your best and worst performers based on the London trading schedule: Germany 30: 2.32% Wall Street: 2.04% US 500: 1.98% France 40: 1.72% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/oxdKK48tbV
  • New York Fed Purchases $14 B in Treasury Coupons
  • Democrats in the Senate block $250 billion small business stimulus plan $SPX
  • Oil on a roll...Brent =6.5% at $36.50/bbl...#oott #brent @DailyFX https://t.co/PzgnGu27p6
  • RT @lampidicsparrow: 20mbpd https://t.co/M05rMBbPAK
  • Hey traders! We are yet again back with a daily market update with @DailyFX Chief Strategist, @JohnKicklighter he answers if we are heading into a recession and what are the key market 📈 information to look out for today and the weekend. https://t.co/kYxCym8rxf
  • OPEC+ and other are to discuss cuts as big as 20mbpd, according to on Russian source #OOTT
  • Fed Chair Powell: - Will only scale back support when economy is recovering $SPX
Coronavirus Impact: S&P 500, DAX, Gold and Crude Oil Outlook

Coronavirus Impact: S&P 500, DAX, Gold and Crude Oil Outlook

2020-02-28 12:00:00
Justin McQueen, Analyst
Share:

S&P 500, DAX, Gold, Oil Price Analysis and Talking Points

  • Global Equities Sell Off on Coronavirus
  • Room for Deeper Drop Before Sharp Recovery
  • Gold Outperforms, while Crude Oil Prices Plunge

The spread of the Coronavirus has prompted a sharp deterioration in risk appetite with equity markets tumbling, which in turn has seen investors seek safety in gold. Alongside this, oil prices have descended into bear market territory, consequently, pushing global inflation expectations lower and thus markets have repriced the likelihood of continued central bank easing. However, while volatility across various assets have soared, we put these moves into context based on previous virus outbreaks.

How to Use IG Client Sentiment in Your Trading
How to Use IG Client Sentiment in Your Trading
Recommended by Justin McQueen
Improve your trading with IG Client Sentiment Data
Get My Guide

Equities

The sell-off across the equity space has been based with the S&P 500 falling over 6% this week. However, the move is not unprecedented given that the index had dropped as much as 12% during the SARS outbreak. Elsewhere, the DAX has been among the most adversely effected with the index plummeting over 8% in reaction to the coronavirus spread, although, much like the S&P 500, with the response not unusual from a virus outbreak, there is scope for further declines.

Figure 1. S&P 500 Moving in Line With Reaction to SARS Outbreak

Coronavirus Impact: S&P 500, DAX, Gold and Crude Oil Outlook

Figure 2. DAX Drop from Coronavirus is Not Unusual…. Scope for Further Losses

Coronavirus Impact: S&P 500, DAX, Gold and Crude Oil Outlook

Commodities

As has typically been the case for gold pricesduring a virus outbreak, the precious metal has outperformed, even more so than the average having edged towards $1700. The precious metal has also benefitted from the coinciding drop in US yields, which have hit all time lows. Elsewhere, oil prices have posted a sizeable drop relative to previous outbreaks as demand for jet fuel has cratered with China reporting in early February that oil demand was expected to fall over 25%. As such, with the virus continuing to spread across Europe and now hitting the Americas, oil prices remain vulnerable.

Figure 3. Gold Outperforming Historical Average of Virus Outbreaks

Coronavirus Impact: S&P 500, DAX, Gold and Crude Oil Outlook

Figure 4. Oil Prices Underperform Relative to Previous Virus Outbreaks

Coronavirus Impact: S&P 500, DAX, Gold and Crude Oil Outlook
Trading Forex News: The Strategy
Trading Forex News: The Strategy
Recommended by Justin McQueen
Trading Forex News: The Strategy
Get My Guide

Impact of Virus Outbreaks: S&P 500, Gold, Oil and Currency Analysis

--- Written by Justin McQueen, Market Analyst

Follow Justin on Twitter @JMcQueenFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.