China Government Suspend Equity Market Trading to Prevent Sell-Off

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Monday, February 03, 2020   / 09:00AM / United Capital Research /  Header Image Credit: The New York Times


In the previous week, bearish sentiment continued to dominate activities across the global market as risk-off sentiment persists on the back of the coronavirus outbreak in China which has now spread to other countries of the world like Japan, Thailand, Singapore, U.S., and Canada. Notably, to prevent a massive sell-off, Chinese authorities suspended trading activities on Shanghai and Shenzhen exchange throughout the week. However, with the trading suspension scheduled to be lifted this week, market participants are expecting a runoff on the exchange. 

Meanwhile, central banks across the globe remained dovish as monetary authorities in Kenya, Ukraine, and Sri Lanka cut their key policy rates by 25bps, 250bps and 50bps respectively. However, the US Federal Open Market Committee (FOMC) unanimously held interest rates steady and tweaked postmeeting statement to reflect what appears to be a stronger commitment to nudge up inflation. 

Elsewhere, Britain exits the EU months after the BREXIT referendum with the EU giving its final, formal approval to Brexit on Thursday, 29 Jan-2020.  Thus, the UK will become the first country to leave the EU after 47 years of integration. What follows is an 11-month transition period (terminating on Dec-31st 2020) that was agreed between both parties.   Furthermore, crude oil prices continued its recent downward trend, fell by 3.6%w/w to $58.6.0/b. This was amid concerns around weak energy demand from China following the coronavirus outbreak. This week, we expect UK departure from the EU to dominate the headlines coupled with updates on Coronavirus across the globe.

 

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