European shares rose supported by a weaker euro, while a decline in the number of new coronavirus cases raised hopes that the impact of the epidemic on the global supply chain would be short-lived. The pan-European STOXX 50 rose 0.65% and is now quoting 3851.85 as the number of new cases of the deadly virus fell for a second straight day in China. All eyes will also be on a raft of economic data from the euro zone later in the day, including a flash reading of the Purchasing Managers’ Index (PMI) for France and Germany. A survey yesterday showed a sharp deterioration in German investor sentiment, sending the euro crashing through a closely watched support level at $1.08 boosting European stocks as the DAX reached 13739.15 and French CAC 6094.74. The common currency was last trading near its lowest levels since April 2017.
Asian shares and U.S. stock futures rose as investors tried to shake off worries about the coronavirus epidemic. MSCI’s Asia-Pacific recovered from a shaky start to rise 0.4%. Chinese shares erased early declines to trade 0.6% higher. Australian shares were up 0.37%, while Japan’s Nikkei stock index rose 0.95%. China, the world’s second-largest economy, is still struggling to get its manufacturing sector back online after imposing severe travel restrictions to contain a virus that emerged in the central province of Hubei late last year. Mainland China had 1,749 new confirmed cases of coronavirus infections, the country’s National Health Commission said down from 1,886 cases a day earlier and the lowest since Jan. 29. The death toll in China has topped more than 2,000 from the flu-like illness which has already spread to 24 other countries. China is still struggling to get manufacturing going again in the world’s second-largest economy, after imposing stringent city lockdowns and travel restrictions to contain the virus that has now killed more than 2,000 people, but investors remain optimistic that the economic fallout may be short-lived. The People’s Bank of China cut the interest rate on its medium-term lending on Monday, which is expected to pave the way for a reduction in the benchmark loan prime rate tomorrow as policymakers try to ease financial strains caused by the virus. In the onshore market, the yuan fell to a two-week low at over 7 per dollar as traders continued to ponder the economic impact of the virus and the chance for more monetary easing.
Oil prices rose with Brent gaining a seventh straight day amid broad optimism as new coronavirus cases fell and concerns rose over supply after a U.S. move to cut more Venezuelan crude from the market. Brent was up by 21 cents at $57.96 a barrel while U.S. oil was up 70 cents at $52.75 a barrel. Brent has risen nearly 10% since last week falling to its lowest this year so far, most recently supported by a U.S. decision to blacklist a trading subsidiary of Russia’s Rosneft that President Donald Trump’s administration said provides a financial lifeline to Venezuela’s government. Prices have also been supported by hopes that the Organization of the Petroleum Exporting Countries (OPEC) and its allies will deepen supply cuts. The grouping, known as OPEC+, has been withholding supply to support prices and meets next month to decide a response to the downturn in demand resulting from the coronavirus epidemic. In the U.S., which is not party to any supply cut agreements, crude oil production has been rising as shale output grows. Shale production in the U.S. is expected to rise to a record 9.2 million barrels a day next month, according to the Energy Information Administration.
The number of foreign visitors to Japan fell for the fourth straight month in January as the impact of a South Korean boycott continued to weigh, with further, sharper falls expected ahead as the coronavirus keeps away Chinese travellers. Total foreign arrivals, which include tourism and business arrivals, declined 1.1% to 2.66 million from 2.69 million in the corresponding month last year, Japanese government data showed. Arrivals from South Korea - which has been boycotting Japanese goods and services since a trade dispute ignited between the two countries last year, plunged 59% year-over-year, the Japan National Tourism Organization said. The number of mainland Chinese visitors to Japan rose 23%, helped by a favourable comparison with 2019 when the Chinese New Year - a peak travel period - took place in February. The Chinese New Year officially began this year on Jan. 25 - before China halted all tour groups to other countries due to the coronavirus on Jan. 27. The travel ban is likely to have a sharp impact on Japan’s tourist arrivals from February.