Oil Drops On Supply As Coronavirus Continues To Threaten Markets

Coronavirus is the biggest threat flashing on traders’ platform on Monday morning. Investors are concerned about the rising death number over in China and workers are not being able to return to work. The fear is that by opening factories you increase the risk of contamination.

Apple (NASDAQ:)’s stock is likely to be hit in Europe and in the US session today because Foxconn, one of the biggest suppliers of the iPhone wasn’t able to open its production because of the virus outbreak. Previously, it was anticipated that the company is going to open its factory today, but the risk to human life is greater than the economic impact.

The coronavirus has influenced the Chinese , the data recorded their biggest year-on-year jump since 2011. It jumped to 5.4% and rose 0.1% year-on-year.

The hope is that factories would resume their work during this week and hopefully, if that happens, then the impact on the global growth would not be that detrimental—perhaps 20-25 basis points. But if China fails to resolve the issues, and the factories remain under the virus influence, then expect the growth to have more devastating influence, maybe over 70 basis points impact on the GDP number during the first quarter.

Commodities

prices continue their downward trend and traders do not show any interest because of the supply concerns. We are expecting the oil prices to extend their losses today because the largest importer of oil, China has some serious issues to resolve. Crude dipped below the critical level of $50 before it went back up, but the fact that the prices have crossed the significant support zone tells me that bulls are no longer in control of the price and it is likely that the price would move towards the $48 mark. The hopes were that Russia would give up its position and listens to Saudi Arabia which wants a production cut. But so far, the country hasn’t made its mind and still thinks that it needs more time to decide its position if it supports oil production

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