Coronavirus is the biggest threat flashing on traders’ platforms on Monday morning. Investors are concerned about the rising number of deaths in China and workers are unable to return to work. The fear is that by opening factories you increase the risk of contamination.
Apple’s stock is likely to be hit in Europe and in the US session today because Foxconn, one of the biggest suppliers of the iPhone, wasn’t able to open its production plant because of the virus outbreak. Previously, it was anticipated that the company would open its factory today, but the risk to human life takes precedence over the economic impact.
The Coronavirus has influenced Chinese consumer prices, the data recorded their biggest year-on-year jump since 2011. It jumped to 5.4% and producer prices rose 0.1% year-on-year.
The hope is that factories would resume work during this week and hopefully, if that happens, then the impact on global growth would not be too detrimental—perhaps 20-25 basis points. However, if China fails to resolve the issues, and the factories continue to be affected by the virus’ influence, then expect the growth to have a more devastating influence, maybe over 70 basis points impact on the GDP number during the first quarter.
Oil trading prices continue their downward trend and traders fail to show any interest because of the supply concerns. We are expecting oil prices to extend their losses today because the largest importer of oil, China has some serious issues to resolve. Crude dipped below the critical level of $50 before it went back up, but the fact that the prices have crossed the significant support zone tells me that bulls are no longer in control of the price and it is likely that the price would move towards the $48 mark.
Hope was that Russia would give up its position and listen to Saudi Arabia which wants a production cut. But so far, the country hasn’t made a decision and still thinks that it needs more time to consider its position on whether or not to support oil production.