Market dynamics: Coronavirus fears drive investors to safe-haven assets

Market dynamics: Coronavirus fears drive investors to safe-haven assets


Safe-haven investments have been rallying since the coronavirus outbreak became the markets’ No.1 worry in January. Experts say the full financial and economic cost of the outbreak is incalculable. The US dollar index reached a three-year high as investors worrying about the global coronavirus outbreak were moving their money into the safe-haven greenback. After climbing to near a three-year high on
Wednesday, the US dollar index finished the week at its highest level since April 2017, even though it traded in the red on Friday at 99.26. On a weekly basis, it rose by 0.19%. The US economy is less reliant on trade and
exports than its peers. That means the expected slowdown of China’s
economic growth will hurt the United States less than it will other countries. According to forecasts, US growth will accelerate
to 2.6% in the first quarter. With a tight labor market and modestly rising wages, the American consumer is in a ‘good shape’. Meanwhile, the euro fell to its lowest level against the dollar in 34 months on Tuesday, but managed to recover most of the losses by Friday’s close. The common currency closed almost flat at 1.0845 on Friday. Meantime, the British pound was in the red for the most part of the last week. However, it somewhat recovered on Friday to close at 1.2971. Still, for the week, sterling posted a 0.5% fall. The decline come amid ongoing concerns that the EU and UK are moving further apart on the matter of trade ahead of official talks
which are due to start next month. According to analysts, fractious trade negotiations are one of the reasons the pound is expected to endure a notable dip over the course of
the next six months. Still, UK economic data has improved notably
since the election and this has in turn lead markets to bet the Bank of England will refrain
from cutting interest rates in the near future, which is in turn positive for sterling. Elsewhere on the crypto market, Bitcoin was
trading in the tight range following the huge price dump last Wednesday. For the week, the No.1 cryptocurrency posted
a 5.2% fall. Bitcoin traders and investors have begun gearing
up for the looming May Bitcoin halving event, among other positive Bitcoin developments
expected this year. Whether the upcoming Bitcoin halving has been
“priced in” by the market has become a controversial issue among investors. In commodities, oil prices fell on Friday
as OPEC+ decided not to move its March meeting forward while Russia indicated that it currently
has no intentions to cut production further. Brent crude settled at $58.50 a barrel in
Friday, posting a 1.3% fall for the day. Still, for the week, it gained 3.8%. Meanwhile, the US benchmark WTI settled at
$53.38 a barrel on Friday with a 0.7% decline. On a weekly basis, the oil futures contract
also advanced by 3.8%. In the meantime, Gold continued its record-breaking
run. Seven straight sessions of gains lifted it
to a fresh 7-year high on Friday after renewed fears about the coronavirus drove investors
into safe haven assets. Gold price touched a new intraday high of
$1,645.00 on Friday, which was up by 1.7% from Thursday’s settlement and the highest
level since mid-February 2013. For the week, Gold price gained 4.4%.

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