US futures this morning indicated that the Dow Jones is likely to open 130 points higher (5:59am EST) however have taken a turn for the worst in the past half an hour. Global tensions have been predicted stabilise in the coming weeks after the worst-recorded week on record since the 2008 GFC. The global reaction to the vast spread of the virus sent investors into panic, especially with cases sharply rising across Europe and the Middle East. With Global markets such as the ASX recovering in the afternoon, it seems likely that the US market may begin to find some support at 25,000. It is likely however that the US markets remain red for the coming days.
What to expect come market open?
Before I start, I am obliged to remind our viewers that this is not advice only general commentary from my extensive research in this area.
The biggest concern for investors is that the Dow will begin to rally at open, then reverse downwards due to the recent Chinese economic data. The economic survey illustrated a fall in PMI (Purchasing Managers Index), underperforming by 5 points. This is generally a sign of contraction in the economy regarding productivity, however the number is even lower than what economists expected. This information gives investors a good insight into the impact of the virus on productivity and efficiency, as the world’s most productive workhorse (China) begins to tire.
However, we have already been warned about the economic effect of the virus, and I believe a short economic slowdown due to the virus will not effect the markets as severely as some are predicting. Until any further concerning news on the virus is released, the markets will begin to stabilise if not slightly increase over the next 3 months. It is only a matter of time until a Universal vaccine floods the mainstream media, allowing investors to finally relax.
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The information above should not be taken as financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
Written by Tyger Fitzpatrick, Founder of YIG.