Investor sentiment received a boost following a liquidity injection by China’s central bank
at the start of the week, widely seen as a move by authorities to prevent stagnation in the face of the Wuhan coronavirus pandemic, which has given rise to significant disruptions in commercial activities.
Meanwhile, many local authorities in China have also urged companies to resume operations following the extended holiday in the country and factories to maintain normal production rates, further raising hopes that the virus will have a limited impact on the world’s second-largest economy.
But wider concerns of the coronavirus, which originated in the central Chinese city of Wuhan, continued to loom large across global markets, keeping investors from becoming overly confident.
“US stocks have been rallying, reportedly due to subsidence from peak coronavirus fears, after the rate of new infections reported by China yesterday (for February 10) was smaller than the day before and some factories in China have begun to re-open,” Ray Attrill, head of foreign exchange strategy at National Australia Bank, said in a morning note.
“No matter that China’s health commission has reportedly changed the way infection cases are henceforth to be reported, with patients testing positive for the virus but not displaying symptoms no longer to be counted in the statistics. This is at a time when some 160 million Chinese are said to be about to return to the cities to restart work in the factories. What could possibly go wrong?” Attrill added.
As a result, the base metals gave a mixed performance on Wednesday morning.
The most-traded April copper contract rose to 45,780 yuan ($6,565) per tonne at the close of the morning session, up by just 0.1% or 60 yuan per tonne from a close of 45,720 yuan per tonne on Tuesday.
The March aluminum contract ticked up by 0.3% to 13,745 yuan per tonne and the March lead contract edged up by 0.4% to 14,220 yuan per tonne, while the April zinc contract was flat at 17,125 yuan per tonne. Meanwhile, the June tin contract slid by 0.2% to 134,600 yuan per tonne and the April nickel contract dropped by 0.4% to 105,740 yuan per tonne.
- The dollar index, which gauges the strength of the US dollar against a basket of foreign currencies, was down by 0.01% at 11.30pm Shanghai time, at 98.75.
- The Shanghai Composite Index was up by 0.21% at 2,907.79 as at 11.30am Shanghai time.
- In data on Tuesday, the United Kingdom’s first preliminary reading for gross domestic product (GDP) growth in the final quarter of 2019 was flat, in line with analysts’ expectations; monthly GDP increased by 0.3% in December 2019.
- UK manufacturing and industrial production were both weaker than expected in the final month of 2019, with month-on-month increases of 0.3% and 0.1% respectively. This compares with the 0.5% increase in manufacturing production and the 0.3% rise in industrial production that had been forecast.
- Data from the United States on Tuesday showed the National Federation of Independent Business’ (NFIB) Small Business Index improved to 104.3 in January from 102.7 in the prior month.
- Job openings in the US tumbled to their lowest level in two years in December 2019 at 6.42 million, according to data from the US Labor Department on Tuesday. This was well below the expected reading of 6.93 million.
- It is a relatively quiet day for data on Wednesday with the European Union’s industrial production, UK leading indicators and US crude oil inventories of note.
- In addition, US Federal Reserve chair Jerome Powell is due to testify on the Semiannual Monetary Policy Report before the Senate Banking Committee, in Washington DC.