On Wednesday, January 22, futures contracts of popular stock indices: S&P 500, Nasdaq 100 and German Dax indicate the possibility of opening the market at record high levels together with improved sentiment in Asian markets. Thus, yesterday's fear passed quickly, and every sell-off seems to investors only an opportunity to buy stocks at better prices.
Just yesterday, information that a deadly virus had reached the US caused a sell-off on Wall Street. The Dow Jones Industrial Average fell more than 0.5 percent, leading the way. Above all, shares from the tourism and aviation sector were cheaper. The Dow Jones Transportation Average fell by almost 2 percent. Nevertheless, today in the morning investors behave as if nothing had happened, and indices in Asia increased. Hang Seng increased over 1 percent, while indices in Australia and New Zealand set new records (AU200 at Conotoxia trading platform).
Optimism reigned after information that Beijing had outlined a plan to stop the spread of the virus. Furthermore, the Chinese National Health Commission has announced that it will take more stringent measures in hospitals to protect healthcare workers in the event of new cases. Perhaps the reaction of investors is also a consequence of the fact that the Chinese authorities have openly and honestly approached the public with information about what is happening. In the case of the SARS epidemic in 2002-2003, China initially tried to conceal the whole case.
The ongoing fourth-quarter earnings season in the US is also significant for investors in the stock market. IBM shares increased by almost 4 percent after hours. The company recorded a net income of USD 3.67 billion in the fourth quarter of 2019. In the same period last year, it was USD 1.95 billion. This week, there will be reports of other well-known companies such as: Intel, Procter & Gamble and American Express. Company results seem to be crucial for Wall Street investors because higher valuations of shares should coincide with increasing profits of companies.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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