While a number of fiscal and monetary stimulus measures have already been introduced to combat the virus’ impact on economic growth, the sharp rise in the number of confirmed patients outside of China continues to unsettle investors.
“Italy has expanded its lockdown to be nationwide, shutting schools for a month and introducing a curfew to close bars and restaurants at 6pm. Italian… cases have now breached 10,000 and in the US, the [Centers for Disease Control and Prevention] reports the window for fully containing the virus has passed in some parts of the US,” Tapas Strickland, director of economics at National Australia Bank, said in a morning note.
Strickland added that markets are “likely to remain volatile” because headlines around the coronavirus “continue to be on the negative side.”
There was some market-friendly news regarding the coronavirus outbreak in China, however; Chinese President Xi Jinping on Tuesday made his first visit to Wuhan since the coronavirus outbreak began at the start of year, as new cases of the virus slowed to a trickle in the country where it first emerged.
“The sight of China’s President Xi Jinping visiting Wuhan also boosted sentiment. The visit suggests the country is confident it has stemmed the spread of the virus domestically,” Felicity Emmett, analyst from ANZ Research said.
But investors are still awaiting for signs of a coordinated response from other governments to the coronavirus headwinds before becoming more relaxed.
United States President Donald Trump is said to be pushing for a broad range of fiscal stimulus measures, including tax deferrals and small-business loans, to lessen the coronavirus’ impact on economic growth in the country, while Italian authorities are working on a way to double their existing stimulus package to €16 billion ($18.2 billion). Canada and Australia are expected to roll out their own packages later this week.
In terms of the base metals, nickel was the worst performer of its complex in terms of percentage losses, with the metal coming under pressure weakened fundamentals as well as the negative macroeconomic backdrop.
“Weakening demand from China’s waning stainless steel sector has been well documented even prior to the outbreak. Another bearish catalyst is the growing uncertainty around demand from the electric vehicle (EV) sector following month-on-month declines in Chinese new energy vehicle (NEV) sales since the reduction in government subsidies for such vehicles in July last year,” Fastmarkets research analyst Andy Farida said.
The most-traded June nickel contract slid to 103,630 yuan ($14,906) per tonne at the close of Wednesday’s morning session, down by 580 yuan per tonne or 0.56% from Tuesday’s close of 104,210 yuan per tonne.
Losses were also recorded in May copper at 44,650 yuan per tonne (-0.13%), May lead at 14,450 yuan per tonne (-0.34%) and May aluminium at 12,975 yuan per tonne (-0.08%).
Zinc was the best performer this morning, with a 0.78% increase in its May contract to 16,150 yuan per tonne, while the June tin contract rose by 0.30% to 135,810 yuan per tonne.
- The dollar index, which gauges the strength of the US dollar against a basket of foreign currencies, was slightly down by 0.12% at 96.19 as at 11.30am Shanghai time.
- The Shanghai Composite Index was up by 0.32% at 3006.50 as at 11.30 am Shanghai time.
- In data on Tuesday, Eurozone gross domestic product (GDP) growth was confirmed at just 0.1% for the fourth quarter of 2019, while employment grew by 0.3%.
- There is a host of data from the United Kingdom on Wednesday including GDP, manufacturing production, construction output, industrial production and goods trade balance.
- The US’ consumer price indices and crude oil inventories are also of note.
- In addition, US Treasury Secretary Steven Mnuchin is speaking.