European stocks rebounded on Tuesday morning, despite continued fears about the outbreak of the deadly coronavirus in China.
The death toll from the coronavirus has risen to 106, China’s National Health Commission has said. Authorities reported 25 new deaths on Tuesday, including one in the capital of Beijing. In China, 50 million people remain under lockdown in a bid to contain the virus’s spread.
“As a minimum, Chinese data is going to take a notable hit for many weeks and getting a true read of underlying momentum is going to be hard,” Deutsche Bank strategist Jim Reid wrote.
Despite this, European stock markets opened in the green on Tuesday morning. The FTSE 100 (^FTSE) opened up 0.5% in London, France’s CAC 40 (^FCHI) opened 0.4% higher, and the German DAX (^GDAXI) rose 0.3%.
The small rises across major indexes came after sharp falls across equities on Monday. Neil Wilson, chief market analyst at Markets.com, attributed the “very mild rebound” to investors buying discounted shares after yesterday’s steep falls.
“We are not convinced this will hold,” Wilson said. “One feels equities face headwinds still, as the peak of this health crisis is some way off still.”
The VIX volatility index (^VIX) — a measure of future volatility expectations colloquially known as the “fear index” in the market — spiked 16.7% to reach its highest level since October.
Gold (GC=F) spiked last week as the virus spread and remained at elevated levels, trading close to $1,577.10 per ounce. Bitcoin (BTC-USD) and Japanese yen (JPY=X) have also seen recent gains amid investor appetite for ‘safe haven’ assets. Bitcoin was holding steady, up 0.7% against the dollar to $8,981.56, and the yen was flat against the dollar.
Chinese stock markets remain closed for Lunar New Year celebrations, which have been extended by authorities in Beijing in a bid to try and contain the virus by limiting travel. Japan’s Nikkei (^N225) closed down 0.5% and the Kospi (^KOSPI) in Korea closed down 3%.