© Reuters. Market analysts are getting nervous about another wave of viruses
(Bloomberg) – There were only six new cases, but the resurgence of coronavirus in Wuhan, the city of China where the pandemic began, was enough to create market analysts.
Strategists in Europe, including Rabobank, Societe Generale (OTC 🙂 SA and BMO Capital Markets, cited the rise in infections in their client notes as a worrying statistic.
There is “growing evidence that loosening lockdowns risks an increase in infections,” said Jane Foley and Piotr Matys, currency strategists at Rabobank, in an email note.
Another example: South Korea, which relied on people’s willingness to be tested to limit the spread of the virus, saw an increase in infections linked to people visiting bars. In the past, the number of new daily cases dropped to one or two and sometimes zero.
The news of Asia comes just in time for Anthony Faucy’s testimony during a U.S. Senate hearing Tuesday. The chief infectious disease expert is warning the nation of the dangers of easing lockdowns prematurely. His call for caution is contrary to President Donald Trump’s race to reopen the country.
The resumption of cases confirms which foreign exchange dealers have warned for weeks to watch the second coming of the virus. They have expressed concern over efforts the Swiss franc – a refugee asset – will strengthen to one per. Euro for the first time in five years. The demand for nine-month and one-year long dollar contracts is high.
Their apprehension of the potential increase in cases also spurred the spread between nine- and one-month risk changes for the Australian Yen Cross – a risk barometer – to the widest three years of takeovers.
Bond investors share a similar sentiment that manifested on Tuesday when the UK offered a 10-year syndicated bond. It drums nearly $ 100 billion in orders.
The same cannot be said for stocks. They have been fueled by optimism over previous stimulus plans by governments and central banks. Europe’s most important stock meter rose 0.2% from 1 p.m. 14.35 in London, MSCI (NYSE 🙂 Inc.’s global equity index rose 0.2%, and the S&P 500 index, which had its best month in April since 1987, also rose 0.2%.
“Equity market investors in particular have been pretty willing to go through the bad news,” Foley said. “There is a strong risk that the market has not yet fully discounted how much a shock on the demand side the world could face.”
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