[Click eStock] "China Wuhan Pneumonia Causes Raw Material Market 'Risk Assets' Weakness vs 'Precious Metals' Strength"

[Asia Economy Reporter Oh Ju-yeon] NH Investment & Securities analyzed on the 28th that during the Lunar New Year holiday period, as concerns over the spread of Wuhan pneumonia (novel coronavirus) in China increased, risk asset groups in the commodity market showed weakness, while precious metals showed strength.

Hwang Byung-jin, a researcher at NH Investment & Securities, stated, "The energy and industrial metals sectors, classified as representative cyclical assets, experienced particularly sharp declines, and the agricultural products sector also fell," adding, "On the other hand, the precious metals sector showed strength supported by safe-haven buying."

Amid concerns over the global spread of Wuhan pneumonia, investment sentiment was weighed down by expectations that crude oil demand from China, the world's second-largest consumer and largest importer, would shrink. During the holiday, the price of West Texas Intermediate (WTI) crude oil in the U.S. fell below $55 per barrel, once again threatening the $50 level.

Researcher Hwang analyzed, "Amid the burden of record-high inventories of refined products and the visible seasonal decline in refinery operating rates, concerns over oversupply in the oil market are intensifying short-term downward pressure on oil prices."

Copper prices have also seen an expanded decline after falling below $6,000 per ton. With global inventories shifting from a decreasing trend to an increasing one, concerns over a slowdown in growth in China, the largest consumer, due to the impact of Wuhan pneumonia are triggering new selling pressure.

However, gold prices are attempting to rise again after confirming downward rigidity around $1,550 per ounce. Researcher Hwang said, "While the annual volatility of oil prices (based on WTI) turned negative earlier than expected, reducing inflation hedge demand, the yield on the 10-year U.S. Treasury fell below 1.7%, reflecting a preference for safe-haven assets, which is also supporting gold price strength," adding, "This week, with the January Federal Open Market Committee (FOMC) meeting just passed and Brexit (the United Kingdom's withdrawal from the European Union) scheduled, it is expected that investors' preference for safe-haven assets will continue."

This content was produced with the assistance of AI translation services.