The Asian stocks began to collapse after the Chinese virus outbreak caused investors to move on to the risk-off futures. China’s futures suffered the most, as the virus originated from Wuhan, its 11-million city. One the other hand, the Japanese yen, and Swiss franc rallied, as these stocks are perceived as safe-havens.
It seems the virus-induced fear is subsiding, and the stock market is slowly returning to its previous state, with Yen and Swiss franc climbing down from their high. President Xi Jinping announced on Tuesday that China would defeat the “devil” coronavirus. Despite this statement, other governments organized evacuations. Hong Kong is going to suspend rail and ferry links with the mainland.
The Dollar and the Swissie hit a high record, while the yen falls
For now, the global markets settled. The Swissie has hit its highest record since April 2017, strengthening to 1.067 francs per euro. The dollar index also rose to 0.4% at 97.995 on Tuesday. The offshore yuan increased by 0.24% versus the dollar after its three-week lows. On the other hand, the Japanese yen dropped down to 0.22% at 109.13 per dollar. While the Swiss franc lowered to 0.36% against the dollar, last at 0.973.
According to Thierry Wizman, global interest rates and currencies strategist at Macquarie Group, more reports show that the Chinese are clamping down. As he noted, if there is anything driving things, it seems to be the fading of concerns around the coronavirus, which has killed 106 people so far.
Wizman stated that with much of Asia closed, foreigners might be feeling that the only way they can get exposure to the global stock market is through buying on the U.S. market. China and Hong Kong are closed. Maybe that’s what is strengthening the dollar. If that’s the reason, then that would reverse in time when the other markets open up again for trading – said the strategist.