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The DAX opened at all-time high having missed a record close yesterday by a hair’s breadth. The index rallied to 13,630 as other European bourses enjoy a firmer open. German companies are among most exposed global trade worries, and therefore those enjoying the biggest bounce since US-China relations improved at the back end of last year, resulting in this month’s trade deal.

Markets are largely shrugging off coronavirus concerns today after feeling a bit under the weather on Tuesday.

US stocks edged away from all-time highs as traders returned from the long weekend to the coronavirus outbreak in China and the start of Donald Trump’s impeachment trial. The Dow was down 150pts on the day, or a drop of 0.5%, while the S&P 500 slipped 0.25%. The first coronavirus case in the US was recorded, raising fears of the virus spreading. Airline, casino and cruise company shares were worst hit. 

Boeing took a nosedive, weighing heavily on the Dow, as it emerged the firm won’t get regulatory approval to fly the grounded Max 737 at least until the middle of the year. Reports that pilots have totally lost trust in Boeing are a further worry. Shares were halted limit down, slipping 5.5% before closing down 3.3%.

Donald Trump’s impeachment trial has begun with several wins for the Republican Party as Senate majority leader Mitch McConnell held his troops in for action to repel repeated Democrat sallies. The Dems made an early breach in the GOP wall by forcing McConnell to allow more time for opening arguments, but thereafter the defences held as a series of votes were passed on party lines 53-47. Dems don’t need many GOP Senators to waver, but for now it seems the citadel is safe. Key will be Republican aims to prevent witnesses being called. For now the Democrats’ chances of winning look like a forlorn hope.

Asia has broadly rallied overnight. The Hang Seng recovered from its worst day in months to rise 1.2%. 

European indices climbed off the lows struck in the morning to pare losses on the day but were still broadly weaker. The DAX was the best of an ugly bunch, eking the slenderest of gains – and moving to a near record close. The FTSE 100 edged 0.5% lower as the pound rallied, weighing on the international facing stocks.

In FX, the pound is on a firmer footing as markets dial back expectations the Bank of England will cut rates. GBPUSD has held gains above 1.30 at 1.3050 where it’s wrestling with the 50-day moving average and the long-term 23.6% Fib resistance around 1.30540. If these are breached we may consider a move back to the key double Fib level at 1.31450, a previous support zone. If the Bank does not cut then this is where we would expect GBPUSD to move back to, although last Friday’s swing high at 1.31180 needs to be cleared first.

We need the flash PMI releases on Friday to really tell us what the Bank is likely to do. These are undoubtedly set to rebound, as they will reflect renewed business optimism in the wake of the Conservative election win. The sudden absence of the Corbyn risk to businesses will see a rebound in sentiment – the Boris Bounce in action. However, is that enough for the MPC? 

EURUSD failed to break through at 1.11 and was looking weak at 1.1080. The pair seems happy to tread water cautiously ahead of tomorrow’s ECB meeting. USDJPY rallied to take 1.10 again.

Gold and oil doing precious little. Gold has been bounced back to support at $1550 having attempted to make a run at $1570 and running out of steam around $1568. Oil has come back to $58, again aiming to recover the 50% Fib level of the rally from the Oct low to the recent high around $58.30.

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