European stocks fell alongside Asian markets on Thursday over increasing concern on the impact the coronavirus will have on the world’s second-largest economy. As the deadly virus continues to spread and the death toll keeps on increasing, the situation is now starting to have a significant impact on analysts’ and economists’ growth forecasts for China, providing unwelcome sentiment for stock traders. Investors who were hoping for a more dovish Fed yesterday evening have been disappointed as Jerome Powell held rates at their current level and said the mid to long-term impact of the coronavirus on the US economy was still hard to gauge, adding that a direct response from the Fed was still inappropriate. Market sentiment has also been negatively impacted by mixed results brought by tech giants such as Facebook, Microsoft and Tesla yesterday while Unilever and International Paper report today.
Elsewhere investors will keep an eye on today’s BoE meeting, the last one before the UK formally exits the EU. This meeting is likely to increase volatility towards GBP assets as the outcome, with a 50% chance of a 0.5 basis point cut, remains very uncertain to investors. While the impact of this anticipated meeting has already had a negative impact on Sterling this week, it could give a solid mechanical boost to UK shares. So far, the FTSE-100 Index is flirting with the 7,450pts level after rebounding over the 7,410pts zone. However, the market will have to clear the resistance zone at 7,475pts–7,510pts in order to reach previous highs towards 7,700pts and beyond.
