Tuesday, February 25, 2020

Stocks around the world slide on Monday; dip-buying may help equities recover slightly on Tuesday

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  • Dollar
  • Gold
  • Yen
  • Euro
  • Stocks
  • XAU

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Market Recap: Stocks around the world slide on Monday; dip-buying may help equities recover slightly on Tuesday

Wall Street sank on Monday amid fears of the coronavirus spreading rapidly across the globe. Major indices in the US each fell more than 3%, the most since 2018. The CBOE volatility index, Wall Street's fear gauge, hit its highest level since 2018, surging 46.55%, or 7.95 points to 25.03 amid worries of a larger-than-expected hit to the global economy. Confirmed cases of the virus doubled in Italy on Monday to 219 with a death toll of 6 while South Korea's case count and death toll rose to 833 and 7 respectively. Multiple countries in the Middle East also started to report cases of virus. The energy and technology sectors in the S&P500 were the worst performing among all the sectors in the S&P500, retreating more than 4% each.

In company news, Apple's shares plummeted 4.75% to 298.18 per share after it was reported that demand for iPhones fell 28% in China in January compared to December. Its revenue for February is likely to be even worse as it only starts to reopen its some of its 42 stores in China.

Major tech stocks fell across the board, Nvidia, AMD both fell more than 7% each while FAANG + Tesla stocks plummeted as well. Facebook, Apple, Amazon, Netflix, Google and Tesla shares were 4.50%, 4.75%, 4.14%, 2.99%, 4.28% and 7.46% lower on Monday respectively.

Indexes Change (%) Net Change Closing Price
Dow Jones -3.56% -1,031.61 27,960.80
S&P500 -3.35% -111.86 3,225.89
Nasdaq -3.71% -355.31 9,221.28
*Source: Bloomberg

The dollar, yen and euro dominated the basket of major currencies on Monday. The yen surged against the dollar as demand for the currency as a safe haven outweighed Japan's possible recession. The greenback extended its bullish run against most major currencies speculation the US economy may be the least affected by the coronavirus outbreak.

IFO's surveys on current economic conditions and business sentiment in Germany beat expectations on Monday, helping to relieve some of the pressure on the euro from economic data earlier in the year signalling that the European economy might be headed for contraction. IFO's business climate survey rose to 96.1 in February from 95.9 in January instead of a drop to 95.3 forecasted by economists. Its expectations index also climbed to 93.4 in February from 92.9 in January, besting economists' consensus for a decline to 92.1. The upbeat surveys surprised investors amid growing worries of weaker demand for German exports and supply chain pressures as a result of the coronavirus outbreak. The euro rose 0.06% against the dollar to 1.0854 and 0.30% against sterling to 0.8396.

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Safe haven assets spiked across the board amid heightened fears. Gold extended into a five-day rally, gaining 0.97% to 1659.38, on track to reach its highest level of 1692.75 since 2013. Demand for US Treasuries surged, pulling benchmark 10-year yields 10bps lower to 1.37%.

Safe Haven Assets Change (%) Net Change Closing Price
Gold +0.97% +15.97 1,659.38
Silver +0.79% +0.15 18.54
JPY +0.80% +0.89 110.72
*Source: Bloomberg
US Treasury yields Change (bps) Yield (%)
2-Year -10.7 1.25%
10-Year -10.1 1.37%
30-Year -8.0 1.83%
*Source: Bloomberg

Oil suffered its biggest loss since the start of February, erasing any gains from last week. Brent crude futures fell 3.76% to US$56.30 per barrel and WTI crude futures retreated 3.65% to US$51.43 per barrel.

Oil Futures Change (%) Net Change Closing Price
Brent Crude -3.76% -2.20 56.30
WTI Crude -3.65% -1.95 51.43
*Source: Bloomberg

Stocks in Asia may be set for a recovery on Tuesday thanks to possible dip-buying in the market, although it is unlikely that it will recover much of Monday's losses. Japan's Nikkei fell 1.87% on open after the Tokyo Stock Exchange reopened on Tuesday morning. The Japanese index extended its losses and is likely to continue to fall and track major indices' losses on Monday. The KOSPI started Tuesday's trading session 0.17% lower but recovered slightly as of 8.54am (GMT +8). Apart from China dependent countries, a slight recovery in the equities market should be likely after a sharp selloff on Monday.

Asia Change (%) Net Change Last Price As of (GMT +8)
Nikkei Index -3.30% -771.93 22,614.81 8:34:55 AM
KOSPI Index +0.25% +5.21 2,084.12 8:54:50 AM
ASX200 Index -1.54% -107.38 6,870.90 8:54:35 AM
*Source: Bloomberg

Economic data releases for the week ahead include (all timings in GMT +8):

  • Germany Q4 GDP (F) (3pm)
  • US Feb Consumer Confidence Index (Conf. Board) (11pm)