In European Equity Markets the pan-European Stoxx 600 closed down 1.8% provisionally, with all sectors in the red. Among the major bourses, France’s CAC was among the worst performers, falling 2%. Italy’s FTSE MIB also fell, extending sharp declines seen yesterday, on fears the coronavirus outbreak was spreading beyong the north of the country. British aerospace company Meggitt saw its shares down 5.1% after warning of future constraints arising from Boeing’s 737 Max production halt and the coronavirus.

 

In Currency Markets the U.S. dollar stayed soft on Tuesday amid expectations that the Federal Reserve may cut interest rates this year to curb downside pressure on the economy caused by China’s coronavirus outbreak. The euro was last up 0.1% at $1.0863, drifting away from the three-year low it fell to last week, sending it below $1.07 as money flooded into the safe-haven dollar. The yen last traded up 0.2% at 110.53 per dollar. China’s yuan was last up 0.2% at 7.0225 per U.S. dollar in the offshore market, a five-day high.

 

In Commodities Markets oil fell towards $56 a barrel on Tuesday, falling for a third day, as concerns about the spread of the coronavirus and its impact on oil demand outweighed OPEC output cuts and Libyan supply losses. Crude fell almost 4% on Monday, with other commodities also reporting losses while U.S. and European equities suffered their steepest declines since mid-2016 on concern the coronavirus outbreak could turn into a pandemic. Brent crude fell 25 cents to $56.05 a barrel. U.S. West Texas Intermediate crude fell 15 cents to $51.28.

 

In US Equity Markets indices added to losses on Tuesday with its three major stock indexes falling 1%, after officials said the coronavirus was “a rapidly escalating epidemic,” a day after virus worries sent the S&P 500 and the Dow to their biggest daily declines in two years. While U.S. stocks started the session in positive territory, those gains were erased. The S&P 500 lost 0.99%, to 3,194.02 and the Nasdaq fell 1.1%, to 9,119.56. Of the S&P’s 11 sectors, consumer staples, up 0.1%, was the sole gainer while energy was the biggest laggard with a 1.8% dip.

 

In Bond Markets U.S. Treasury yields ticked lower on Tuesday as traders kept up the flight to safety on concerns the coronavirus epidemic would have a significant impact on global growth. The benchmark 10-year yield was down in morning trading at 1.3688%, edging closer to its all-time low of 1.321% reached on July 6, 2016. Traders will watch results of a U.S. Treasury auction of $40 billion worth of two-year notes later on Tuesday.

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