IS Risk Analytics' View From the Desk - February 2020

February was an excellent month for brokers as Covid-19 coronavirus fears brought volatility to a wide range of markets. Volumes were up substantially from January, with some brokers reaching record monthly totals.

Profits were also robust, driven primarily by late month declines in stock indices and gold. With the uncertainty surrounding coronavirus continuing, the volatility may persist well into March, if not longer.

Source: IS Risk Analytics Database. Past Performance is not necessarily indicative of future results

*Average Daily Volume represents the daily volume from ISRA customers for each day of the month divided by the average daily volume for the month. Each day is represented as a percent of the average.

Source: IS Risk Analytics Database. Past Performance is not necessarily indicative of future results

** Average Daily B Book PnL represents the daily B Book PnL from ISRA customers for each day of the month divided by the average daily B Book PnL for the month. Each day is represented as a percent of the average.

ASIA

As the country where the coronavirus first took hold, China has been hit the hardest by its impact. Although recent data shows that the country’s aggressive measures to control the spread of the virus have been effective, the fallout could lead to China reporting negative growth in the first quarter of 2020. It would mark the first time in decades China would have experienced a decline in quarterly growth.

EUROPE

To this point, Italy is the European country most impacted by Covid-19. The country has identified over 2,000 cases and more than 50 deaths. The Italian government has responded by, among other actions, quarantining several towns and villages. The US government is now recommending that travelers avoid all nonessential travel to Italy.

AMERICAS

As coronavirus fears grew late in the month, US stocks slid over 10% from recent all-time highs. In an attempt to limit the economic fallout from the virus, the US Federal Reserve announced an emergency rate cut of half a percentage point in early March. President Donald Trump indicated his support for further cuts and his desire that the Fed bring US rates in line with its competitors.