Health concerns dominate FTSE trade

The FTSE and all other European gauges are in the red this morning, unable to shrug off the effect of China’s spreading coronavirus epidemic, which has claimed more lives over the weekend and has reached Europe and the US.

Energy 6

The FTSE and all other European gauges are in the red this morning, unable to shrug off the effect of China’s spreading coronavirus epidemic, which has claimed more lives over the weekend and has reached Europe and the US. When Wall Street opens later today it is unlikely to be exempt from health fears; US stock futures are already indicating a weaker start to the day.

Pieces of information around the virus are beginning to form a fuller picture. The incubation of the illness which manifests like a mild pneumonia can be up to two weeks, which would explain why Chinese authorities blocked off the most infectious cities fairly quickly. Crucially, the timing of the outbreak will make it harder to contain than at any other point during the year because there is a massive spike in the number of travellers during the week of the Chinese New Year across the country.  

Miners, airlines worst hit, safe havens sought

On the FTSE the same companies are being hit by the virus as last week. Mining companies, luxury goods firm Burberry and airlines are carrying the brunt of the selloffs on concerns that the coronavirus may start affecting Chinese imports and parts of the country’s economy. Instead safe havens like the yen and gold are pulling in investors.

Oil falls below $58

Crude oil ended up among the worst hit assets with Brent crude losing 3.2% after the initial bout of selling sparked heavy stop loss selling. Brent crude is now trading below $58, the lowest level in a month and WTI at $52.4, the lowest point since October.

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.