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Daily market commentary: Coronavirus fears, investors are switching liquidity from stocks to safe havens



Daily Market analysis

ActivTrades’ Market Analysts have prepared for LeapRate their daily commentary on traditional markets for January 27, 2020. This is not a trading advice. See details below:


GOLD

The gold price has started the week in green. Fears over the coronavirus spreading further are pulling up the price as investors are switching some liquidity from stocks to safe havens. Despite the strength of the greenback, the bullion price is taking advantage of this uncertain situation and has recovered to $1,580. The main trend remains bullish, with the short-term correction seen in the last few weeks seemingly over, increasing the chance of the price achieving a new 7-year-high in the next few weeks.

Carlo Alberto De Casa – Chief analyst, ActivTrades

OIL

The oil price is continuing its sharp fall on growing oversupply fears amid concern about the spread of the Chinese flu coronavirus. The barrel is declining for the 6th day in a row and is now approaching the key support level of $51-$51.50, where buyers will try and stop the strength of this bearish movement. Technically the situation is relatively clear, with a strong bearish movement and – so far – no signals of inversion. As mentioned, the support level of $51-$51.50 will be a significant test for understanding how far this declining momentum could go.

Carlo Alberto De Casa – Chief analyst, ActivTrades

EUROPEAN SHARES

Shares fell in Europe alongside US as fears about deadly China virus continue to spread across the world. Investors are becoming more and more worried about the possible economic impact of such a crisis, a sentiment that sent safe havens like Gold and the yen higher on Monday. Many traders expect an increase in volatility this week with several important events in the calendar.

The next Federal Reserve meeting is looming this week with Jerome Powell expected to hold rates where they currently are, which should continue to support US growth and give a boost to riskier assets. The BoE is also expected to decide on rates this week with investors feeling much more uncertain about Mark Carney’s next move, ahead of the UK’s exit from the EU on Friday. This situation is likely to boost trading on UK assets, increasing the chance of directional price action with a new trend taking hold.

In the meantime investors will also pay close attention to the next US GDP data release on Thursday while the earnings season continues with highly anticipated results reports from tech giants like Facebook, Apple and Samsung.

Pierre Veyret– Technical analyst, ActivTrades

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Daily market commentary: Coronavirus fears, investors are switching liquidity from stocks to safe havens

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