Coronavirus - Week Ahead

Coronavirus

According to the World Health Organization, there have been at least 291 people infected and 6 killed by China’s mysterious new respiratory virus known as “Coronavirus”. The virus can be spread from human to human, and currently has no treatment, which is fueling speculation of a world-wide pandemic. The virus originated in Wuhan, the capital of Hubei province, however has since spread to other areas in China. Airports across the world have stepped up screenings on flights arriving from China.

Early in the Asian session, it was determined that an Australian man was tested for coronavirus after returning from a trip to China. S&P 500 futures immediately sold of from 3323.75 down to 3312.75 on fears the virus is spreading outside of China and Southeast Asia. In addition, USD/JPY sold off from 110.21 down to 109.97. Although stocks have bounced since the US session open, the fear is apparent in the markets. If more cases are confirmed, especially outside China, we could see risk off in the markets.

Many are comparing coronavirus to SARS back in 2002/2003, which took the lives of nearly 800 people. Risk off was the market was prevalent in the markets before the virus was under control. There are already fears of an economic impact as China is gearing up for the Lunar New Year, which begins January 24th. Travel is always heavy over this time period, however China’s Global Times Editor recently said that “Concerns are increasing, it is inevitable that people will cut their trips during the Spring Festival and their holiday consumption will be impacted”.

In our “Week Ahead”, we discussed how USD/JPY was already up against a large confluence of resistance on the weekly charts. On a daily timeframe, USD/JPY is holding the Long-term trendline resistance at 110.30 from 2015 and is currently testing the bottom upward sloping trendline from the rising wedge (again). Although today is not over, if USD/JPY closes near or below 109.90, this would form a bearish engulfing candle. Support below is the strong number of recent highs at 109.50/70, and the 200 Day Moving Average at 108.59.

Source: Tradingview, City Index

If coronavirus continues to spread and send increased fears through the market, stock indices could move lower as well. The S&P 500 is currently up against channel resistance and the Golden Fib 161.8% level from the September 2019 highs to the December 2019 lows at 3335. The RSI continues to diverge with price, which means there is potential for a reversal soon. Price can pullback nearly 100 handles to the bottom channel line near 3225 without breaking the upward trend.

Source: Tradingview, CME, City Index

The next few days will be important to the markets to see if the virus spreads throughout the region (and the world). Watch for headlines pertaining to more cases and possible deaths, especially during the heavy travel period of the Chinese Lunar New Year.

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.