Investors quite quickly seem to forget about the still spreading deadly virus and have begun to leave the so-called safe havens on the financial market, turning their backs on the Japanese yen or treasury bonds and gold, and returned primarily to purchases on the stock market, which can be seen by the rise in stock indices.
Bullish sentiment started again in Asia, where the Nikkei 225 gained more than 1% and Hang Seng increased by almost 1%. Investors hope for further actions of the People's Bank of China, which has already reacted immediately after the celebration of the Chinese Lunar New Year. Nevertheless, the appetite for additional liquidity and lower interest rates on the market is growing. Therefore, this time in Asia we can observe a similar phenomenon as during the financial crisis in the US. which means, the worse it was in the economy at the time, the better was happening in the markets, as investors increased their expectations regarding central bank easing, counting on much cheaper cash. Now the scenario seems to be repeating only in a different part of the world and for other reasons.
In turn, investors in Europe enjoyed better macroeconomic data. PMI for the services sector in the euro area has been revised upwards from 52.2 to 52.5 points for the month of January which means the highest level in five months. Also, data from Germany confirmed the increase in the activity of the services sector in January compared to December. The final PMI reading for services was 54.2 points against 52.9 points in December. It is also the best reading in five months, which can mainly be due to increased business activity and employment. Job creation was the strongest in seven months.
All this seems to translate into very good market sentiment, ignoring recent events that may affect the slowdown in the Chinese economy. It is worth noting that another record was set on Wall Street, which set the Nasdaq 100 (US100 on the Conotoxia trading platform), approaching the level of 9500 points. Technology companies are again the leading ones, though the S&P 500 is also close to reaching its last record level. Dow Jones lags behind the most, but the dynamics of increase in recent days remains very high.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
60% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Trade this news from Conotoxia Ltd. platforms
Go to your account
