Daily reviews


Stocks suffer the worst week since the 2008 financial crisis


Coronavirus cases outside China surged dramatically

  • Coronavirus cases outside China surged dramatically
  • Global equities saw aggressive losses amid virus concerns
  • Dollar was mixed but mostly negative during the week
  • Fed rate cut odds increased substantially despite strong economy
  • Economic updates out of the US painted a mostly positive picture
  • Brent crude broke below $50 for the first time since mid-2017

Asian equities

Investor sentiment has deteriorated dramatically across the markets, as coronavirus cases outside China surged, prompting market participants to get rid of high-yielding assets. Coronavirus fears intensified amid a rise in cases across many other countries, including Iran, South Korea, Italy, etc. Mexico was among eight more countries to report first confirmed coronavirus cases.

Moreover, according to the WHO, new coronavirus cases outside China exceeded those in China for the first time. The organization also said that risk is very high, as coronavirus has already wiped $6 trillion off global markets. As a result, China's Shanghai Composite closed down 3.7% on Friday, bringing weekly losses to over 5.5%. It was the index's worst performance since April 2019. Japan's Nikkei ended down 3.7% and benchmark indexes in Australia and South Korea both shed nearly 3.5%.

US equities

Trump put Mike Pence in charge of response to coronavirus and said risks for the US risk ‘remain very low’. Still, the US stocks plunged aggressively, as CDC confirmed first US coronavirus case of ‘unknown’ origin, with California monitoring over 8,000 people. Investors were also spooked by a rising number of warnings from companies including Disney, Apple, and Microsoft.

Against this backdrop, the Dow declined 3.7%, the S&P 500 was down 3.3%, while the Nasdaq Composite fell 2.6%. of note, the S&P 500 fell for the seventh straight day on Friday and suffered its biggest weekly drop since the 2008 global financial crisis. Moreover, the 10-year Treasury yield hit a record low Friday, while the Cboe Volatility Index surged to its highest level since the Great Recession.


The greenback saw mixed dynamics last week but was mostly negative despite decent economic updates out of the US, as the week was dominated by coronavirus headlines again. The main driver behind dollar selling was the rising odds of a rate cut by the Fed, with the central bank official Mester warning about downside risks from the virus outbreak. At the same time, she highlighted that she doesn’t want to cut rates. In turn, Fed vice chairman Clarida said it was still too soon to tell on coronavirus, but the central bank will respond accordingly. Kaplan noted that it is unclear at this stage of coronavirus calls for US rate change. Meanwhile, at the end of the week, the Federal Reserve governor Powell said that the economy looks fine but the monetary authorities ready to act as needed.

On the data front, Chicago Fed National Activity Index rose in January, the S&P Case-Shiller index showed that home prices increase 3.8% in December, Philadelphia Fed Non-manufacturing Business Outlook Survey increased 13 points in February to 36.1, highest level since November 2018, while new home sales surged to 12.5-year high at the start of 2020. US consumer confidence for February arrived at 130.7 versus 132.6 expected, Richmond Fed survey showed that manufacturing activity softened in February, orders for durable goods slipped 0.2% in January, jobless claims rose to 219,000 from a revised 211,000 the previous week, fourth-quarter economic growth was unrevised at 2.1%, January pending home sales rose more than expected, up 5.2%, Chicago manufacturing index edged up to 49.0 in February, while consumer sentiment improves slightly more than initially estimated.

Despite the updates were mostly upbeat, the EURUSD pair rose decently over the past week, having climbed to the 1.1050 intermediate resistance, as bets on a rate cut by the Fed rose substantially. GBPUSD closed in red after a failure to confirm a break above the key moving averages. The pair finished the week marginally above 1.28 after a rejection from local highs above 1.30. Meanwhile, USDJPY suffered dramatic weekly losses amid a widespread risk aversion that furled the safe-haven yen demand. As a result, the pair plunged from the 111.70 area, down to 107.50.


Oil prices plunged last week, with Brent crude oil for April delivery being down over 13% amid demand collapse concerns due to the further spread of the coronavirus. Moreover, the market saw the steepest weekly fall in more than four years. The sell-off accelerated on the news that new infections of the coronavirus surpassed those in mainland China, where more than 2,700 people have died. A further 57 deaths have been recorded in other countries. A smaller-than-expected increase in U.S. crude stockpiles during the week ending February 21 provided a marginal support to oil prices. Still, oil traders hope for steeper supply cuts by the Organization of the Petroleum Exporting Countries and allies including Russia. The OPEC+ meeting is due later this week.