Central Bankers Expected To Underpin Stocks; LNG Dives As Coronavirus Claims 1000

Central Bankers Expected To Underpin Stocks; LNG Dives As Coronavirus Claims 1000

London Capital Group  | Feb 11, 2020 07:18

There have now been more than 1000 deaths from the coronavirus with 42,700 cases. That makes a mortality rate at 1% according to Imperial College London. Tesla and Ford are returning to production in China but others including Ford are still closed until next week. The Mobile World Congress is losing more attendee companies by the day with Intel (NASDAQ:INTC) the latest to pull out.


Markets are moving in defiance of coronavirus fears. US indices touched more record highs on Monday and Chinese stocks have notched up a sixth day of gains. The Hang Seng was up over 1.5% led by Tencent shares on Tuesday.

European shares are on course for a higher open on Tuesday. Chattering central bankers and the Democratic Primaries in New Hampshire will be a focus, while investors monitor the coronavirus.

There is a notable divergence between the reaction to the coronavirus in the stock markets to commodity markets. We think that is probably explained by expectations for the monetary policy response. If central bankers do not reinforce that expectation today, it could unnerve investors. If they do, the record-breaking rally could have legs.


The dollar has been on a tear, especially against the weakest currencies including the British pound and the Australian dollar. We suspect this dollar strength could at risk when Fed Chair Powell speaks to Congress today. Given the uncertainty around the coronavirus, we expect Powell to adopt a slightly more dovish tone and leave the door open for a rate cut later this year.

Sterling saw a modest recovery on Monday after taking a drubbing last week. Outgoing BOE Governor Carney will be making some remarks. After Carney’s last speech sent the pound on 5% round trip over two weeks, many will be once bitten twice shy. We are cautioning to think twice about any reaction.

There is a data dump from the United Kingdom today, which could spark some volatility. Data on industrial production, trade balance and Q4 GDP growth are all on tap. GDP data is rear-view mirror stuff butt could provide a bump if better than expected. Any sterling bounce looks like it will be fleeting. Traders we speak to prefer fading any strength for when the focus returns to the rather fraught EU/UK trade negotiations.

Christine Lagarde speaks at the European parliament after roughly 100 days in the job. The euro is close to a four-month low, probing October lows. We think a lot of the euro weakness relates to subdued expectations that the strategic review initiated by Lagarde will bring about any changes that result in a more hawkish policy stance.


Natural Gas has slumped to near a four-year low, dropping 5% on Tuesday. The entire energy complex is suffering under coronavirus fears and issues with over-supply. NatGas has a weather problem too. The mild winter in Asia combined with Chinese importers of LNG ending contracts because of the distribution problems caused by the coronavirus has crushed seasonal demand.

WTI crude oil is back above $50 per barrel Tuesday morning after reaching a one-year low.

Opening Calls

FTSE 100 is set to open 40 points higher at 7486.

DAX is set to open 97 points higher at 13591.

S&P 500 is set to open 10 points higher at 3362.

Original Post

London Capital Group

Related Articles

Latest comments

Add a Comment
Please wait a minute before you try to comment again.
Write a reply...
Please wait a minute before you try to comment again.

Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

English (USA) English (India) English (Canada) English (Australia) English (South Africa) English (Philippines) English (Nigeria) Deutsch Español (España) Español (México) Français Italiano Nederlands Português (Portugal) Polski Português (Brasil) Русский Türkçe ‏العربية‏ Ελληνικά Svenska Suomi עברית 日本語 한국어 中文 香港 Bahasa Indonesia Bahasa Melayu ไทย Tiếng Việt हिंदी
Sign out
Are you sure you want to sign out?
Saving Changes


Download the App

More markets insights, more alerts, more ways to customize assets watchlists only on the App

Download the App

More markets insights, more alerts, more ways to customize assets watchlists only on the App