European markets slid lower on Thursday while safe havens surged as renewed concern about the spread of the coronavirus reversed recent positive market sentiment. A revision to the counting process resulted in 15,000 new cases being reported in the Chinese province of Hubei, the epicentre of the virus outbreak. This significantly increased the total number of infected people and undermined yesterday’s reassuring data in which the spread of the virus appeared to be slowing. This is seen, by investors and short-term traders, as the perfect occasion to reduce their exposure and take some profits after stock markets hit fresh record highs yesterday. However, today’s market correction may also be short-lived as the revised counting process in China, despite adding 15,000 new cases, doesn’t necessarily mean the virus isn’t still spread slower.
Retailers and financials are currently among the worst performers in Europe with equities such as Nestle, Credit Suisse and Barclays driving the Stoxx-600 lower. All European benchmarks are trading in red territory today with the IBEX-35 in Madrid the worst performer. The market opened with a strong bearish gap below 9,900pts this morning and continues to sink towards its bullish trend line with a first available support zone located between 9,840pts and 9,850pts. The 21-period exponential moving average has already reversed and now fulfils a resistance role to the market. In the meantime, investors will keep an eye on today’s US CPI due later today as well as earning reports from giants such as Alibaba and Airbus.
