This behavior is consistent with a negative expectation, “that the virus affects global economic performance, as this would affect the prices of raw materials,” says the private institution’s report to its customers.
A US Food and Drug Administration (FDA) official said Wednesday that “the coronavirus is close to becoming a pandemic, which contributed to capital markets in that country eradicating the advance of the morning and again recorded losses for the third time in the week. ”
In the session, the Global Risk Perception Base Indicator stood at 216 units, “which means high risk perception,” details the bank’s report.
Within that index, the market components of merchandise, capital, money, currencies and country risk “behaved consistently with a greater perception of risk.”
As a consequence, the session “was characterized by an increase in the demand for shelter assets.”
In the exchange market, for example, “most currencies showed losses, particularly those of emerging economies.”
The nervousness of the markets in Brazil “could be accentuated in the coming days, after today the first case of coronavirus in the country and in Latin America was confirmed.”
As a result, the Brazilian real depreciated 1.35%, and the Bovespa index of the São Paulo Stock Exchange registered a sharp fall of 6.81%.
That result of the Brazilian stock market is “its biggest daily setback since May 18, 2017,” according to the bank.
By the end of the week, market participants “will continue to monitor the progress of the coronavirus,” predicts Banco Base.
The financial group based in the Mexican industrial city of Monterrey (north) estimates that “if nervousness persists, the exchange rate is likely to maintain its upward trend over the last five sessions.”
As a result, it would be “strongly drilling the key resistance of 19.21 pesos per dollar where the 200-day moving average is located and approaching the level of 19.30 pesos per dollar that has not been reached since December 9 of 2019 “.
On Wednesday, Banco México (Banxico, Central) published the report for the fourth quarter of last year, lowering its forecast for economic growth by 2020, from a previous range between 0.8 to 1.8%, to one lower than 0, 5 to 1.5%.
The monetary agency also revised downward the forecast of job creation to between 440,000 and 540,000 jobs during the current year.
Banxico highlighted as “an additional factor of uncertainty” the outbreak of coronavirus in China and its spread to other countries, which could affect global economic activity.