Coronavirus Outbreak Results In Trading Boom

28 February 2020

Ever since the announcement of the first coronavirus-caused death on January 11th 2020, the virus spread has been front-page of all local and global news, leaving the trade war and post-Brexit talks to bite the media dust. What one may find surprising, however, is how the outbreak had affected the markets to result in a one-of-a-kind boom of trading interest.

As you can see on the graph below, google search results as of January 19th came to include, among others: “coronavirus trade ideas”, “coronavirus stocks to buy” and “coronavirus effects stock market”, while results for “trade forex” and “forex trading” have increased by over 4 times, reaching their peak of the last 5 years!

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Where We Stand Today

As February is coming to an end, European stocks have been following Asia’s heavy decline for several consecutive days, while panic continues to grow. The Euro Stoxx 600 index of European shares has fallen >2%, with FTSE 100 and the German Dax showing a very similar percentage decline situation. The FTSE All World Index, on the other hand, has shed around $5tn in value since its January peak.

The oil price fall, in turn, continues to deepen as Brent reaches $52.80 a barrel - its lowest level in over a year. On the US front, treasury bond yields have touched a record low of 1.2905% in Asian trading, and gold keeps its strong safe-haven asset position.

Where Does That Leave us?

Unsurprisingly, gold and government bonds remain the top safe haven assets of choice. Further, the US dollar is still the investors’ preferred bet-on currency, while the Yen looks like it’s losing its safe-haven status, as the number of confirmed cases in Japan increase and uncertainty prevails.

When it comes to coronavirus stocks to buy, in turn, the situation remains volatile as airline and hotel companies continue to take a hit, and tech concerns increase with Microsoft following Apple’s financial warning as to missing its sales guidance for the March quarter due to the epidemic spread.

Netflix, on the other hand, seems to be getting ahead, as people follow government advice to refrain from unnecessary contact as a precautionary measure. With people choosing to stay home, analysts predict an uprise of interest towards streaming entertainment, which may also signal that Disney+ can get the push it’s been waiting for.

All in all, one can only hope for the best and keep strong focus on trading fundamentals, which tend to largely dominate the scene during our times of uncertainty.

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Trading CFDs involves significant risk of loss

Information Sources:

https://www.bbc.com/news/business-51624003

https://www.nytimes.com/2020/02/25/business/stock-markets-covid-19.html

https://www.investors.com/research/futures/oil-falls-as-spreading-coronavirus-convulses-markets-worldwide/

https://www.marketwatch.com/story/why-the-coronavirus-outbreak-is-delivering-a-fresh-dose-of-recession-fear-to-the-stock-market-2020-02-22

https://www.ft.com/content/9586d822-58fe-11ea-a528-dd0f971febbc

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