Tuesday, March 10, 2020

Asia Times: Dow almost enter bear territory; Trump’s emergency relief eases demand for lower risk assets

Tags
  • Dollar
  • Gold
  • Yen
  • Stocks
  • Oil

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Market Recap: Dow almost enter bear territory; Trump’s emergency relief eases demand for lower risk assets

The Dow lost over 2,000 points on Monday after US markets opened following a crash in oil prices. An initial tumble in across sectors forced a brief trading suspension in the US, allowing the major indices to recover slightly before free falling to almost end the bull run in the US financial markets. Each of the three major indices was down more than 7%, with the Dow ending roughly 19% below its all-time high, almost entering bear market territory.

Indexes Daily Change (%) Net Change Closing Price
Dow Jones -7.79% -2,013.76 23,851.02
S&P500 -7.60% -225.81 2,746.56
Nasdaq -7.29% -624.94 7,950.68
*Source: Bloomberg

Oil-related currencies were the worst performing among major currencies while the yen remained the most in demand on Monday. The Canadian dollar suffered after Oil prices crashed on Monday while the Dollar Index retreated as the outlook for US shale oil was dimmed by the tumbling price of crude oil.

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Gold managed to eke out gains on Monday despite falling after touching 1,700's level as investors continued to flock to safe haven assets. The Japanese yen soared 2.88% against the dollar, to trade at its highest levels against the greenback since October 2016. US Treasuries spiked but pulled back slightly on Monday, with benchmark 10-year yields falling below 0.50% for the first time before recovering slightly to end the day at 0.54%.

Safe Haven Assets Daily Change (%) Net Change Closing Price
Gold +0.40% +6.64 1,680.47
Silver -1.91% -0.33 16.57
JPY +2.88% +3.03 102.36
*Source: Bloomberg
US Treasury yields Daily Change (bps) Yield (%)
2-Year -12.5 0.38%
10-Year -22.2 0.54%
30-Year -29.2 1.00%
*Source: Bloomberg

Oil crashed on Monday after Saudi Aramco announced lower-than-expected crude oil prices following a fallout between Saudi Arabia and Russia for a deeper cut to oil production during last week's OPEC+ meeting. Both Brent and WTI crude oil futures fell by more than 24% in a day. But on Tuesday morning, crude oil prices rebounded more than 5% as of 9.02am (GMT +8) as risk aversion seems to be temporarily lifted. With both Russia and Saudi Arabia flooding the supply of crude oil and a dent in demand for energy as a result of the coronavirus, we may see a sustained dropped in oil prices in the short-to-medium-term.

Oil Futures Daily Change (%) Net Change Closing Price
Brent Crude -24.10% -10.91 34.36
WTI Crude -24.59% -10.15 31.13
*Source: Bloomberg

In Asia, stocks started the day in the red but look to be moving towards a slight recovery, likely as a result of US President Donald Trump's announced emergency relief for businesses amid the coronavirus crisis. Trump said during a press conference on Monday that he will be seeking for a payroll tax cut and “very substantial relief” for businesses affected by the virus. The Nikkei continued to face pressure thanks to the strong yen, while the KOSPI and ASX200 were relatively muted later in the morning, trading less than 1% lower.

Asia Daily Change (%) Net Change Last Price As of (GMT +8)
Nikkei Index -2.32% -457.12 19,241.64 8:55:00 AM
KOSPI Index -0.13% -2.59 1,952.18 9:15:00 AM
ASX200 Index -0.52% -29.86 5,730.70 9:14:35 AM
*Source: Bloomberg

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

  • Eurozone Q4 GDP (F) (6pm)
  • Eurozone Q4 Employment Change (F) (6pm)