Stocks continued to shrug off concerns over the coronavirus and kicked into high-gear risk-on mode. The Nasdaq 100 and Nasdaq Composite both hit new all-time highs. The VIX dropped 10% yesterday alone and the yield on the US 10-year rose 7 basis points. Absent from the party were WTI crude, which fell another 1% to hit a new 52-week low, and Utilities, the only sector to finish the day lower.
That risk-on mode continued today in Asian equities, which moved higher including those in China despite the number of confirmed coronavirus cases in China exceeding 24,000 and the death count approaching 500. While the World Health Organization said this morning that there is still no known treatment at this time, there were reports that scientists are making breakthroughs with a vaccine for the coronavirus. Speculation continues to point to further stimulus moves by the People’s Bank of China as it looks to offset the impact of the coronavirus, including lowering its loan prime rate on Feb. 20, and cut banks’ reserve requirement ratios in the coming weeks.
We think we can safely place “don’t fight the PBoC” alongside the popular investor mantra that is “don’t fight the Fed.”
- Qualcomm (QCOM) is a constituent in Tematica Research’s Thematic Dividend All-Stars Index.
- Chipotle Mexican Grill (CMG), Tesla (TSLA) are constituents in Tematica Research’s Cleaner Living Index.
- FireEye (FEYE) is a constituent in the Foxberry Tematica Research Cybersecurity & Data Privacy Index.