Monday, March 30, 2020

Asia Times: Equities may be set to erase last week’s gains as coronavirus cases top 140,000 in the US over the weekend

Tags
  • Dollar
  • Gold
  • Yen
  • Stocks
  • Oil

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Market Recap: Equities may be set to erase last week’s gains as coronavirus cases top 140,000 in the US over the weekend

Stocks in the US ended a three-day rally on Friday, after cases of the coronavirus cases topped 100,000, refuelling doubts about the future of the US economy.

Indexes Daily Change (%) Net Change Closing Price
Dow Jones -4.06% -915.39 21,636.78
S&P500 -3.37% -88.60 2,541.47
Nasdaq -3.79% -295.16 7,502.38
*Source: Bloomberg

But the slump at the end of the week wasn't enough to erase gains made over the week. The DJIA gained 12.84% over the week, ending a two-week losing streak that erased roughly 26% of value in the index. Stocks around the globe advanced over the week as well, with the Nikkei making the most gains among major markets as the Japanese yen weakened over the week.

Indexes Weekly Change (%) Net Change Closing Price
Dow Jones +12.84% +2,462.80 21,636.78
S&P500 +10.26% +236.55 2,541.47
Nasdaq +9.05% +622.86 7,502.38
FTSE100 +6.16% +319.55 5,510.33
Euro Stoxx +7.07% +180.15 2,728.65
CSI300 +1.56% +56.84 3,710.06
Nikkei +17.14% +2,836.60 19,389.43
KOSPI +9.68% +151.58 1,717.73
ASX200 +0.54% +25.80 4,842.43
Hang Seng +2.98% +679.21 23,484.28
Straits Times +4.90% +118.02 2,528.76
*Source: Bloomberg

In the forex market, all major currencies strengthened against the dollar as demand for the greenback faded thanks to the Fed's efforts and the surge in cases of the virus in the country. The final estimate for the consumer sentiment survey by the University of Michigan for March likely didn't help the dollar as well, as the index was revised down to 89.1 from 95.9, missing estimates for 90.0. The Dollar Index fell 4.33% over the week after losing another 0.99% on Friday.

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Gold slipped while the yen and US Treasuries jumped on Friday in the safe haven asset space. Benchmark 10-year yields fell 17bps to 0.67%, as demand for lower risk assets returned.

Safe Haven Assets Daily Change (%) Net Change Closing Price
Gold -0.19% -3.18 1,628.16
Silver +0.44% +0.06 14.18
JPY +1.50% +1.64 107.94
*Source: Bloomberg
US Treasury yields Daily Change (%) Yield (%)
2-Year -5.1 0.24%
10-Year -17.0 0.67%
30-Year -16.8 1.26%
*Source: Bloomberg

Oil prices suffered losses again on Friday, as an extended lockdown looks more probable. Both the US and UK benchmark sank on Monday morning as well, after US President Trump signalled that the lockdown in the US be will be extended to the end of April removing the possibility of the lockdown ending on the Easter weekend. Brent and WTI crude oil futures were both more than 5% lower on Monday morning as of 7.55am (GMT +8).

Oil Futures Daily Change (%) Net Change Closing Price
Brent Crude -5.35% -1.41 24.93
WTI Crude -4.82% -1.09 21.51
*Source: Bloomberg

In Asia, stocks are likely to fall on Monday, tracking losses in the US and as the coronavirus spreads at a rapid rate in the US. As of Monday morning, the number of confirmed cases of the virus in the US rose to above 140,000. Japan's Nikkei and South Korea's KOSPI indices were both trading more than 3% lower in the first hour of Monday's trading session. Governments across Asia did signal that more financial aid would be rolled out, although little details were given; Japanese Prime Minister Shinzo Abe said that he will be submitting an extra budget to fund more emergency stimulus, while China and Hong Kong said that there were plans to step up stimulus measures.

Asia Daily Change (%) Net Change Last Price As of (GMT +8)
Nikkei Index -3.52% -681.93 18,707.50 8:22:35 AM
KOSPI Index -3.19% -54.81 1,662.92 8:42:30 AM
ASX200 Index +1.10% +53.27 4,895.70 8:42:35 AM
*Source: Bloomberg

Financial markets will be focused on whether futures will limit down ahead of the US market open, which would signal that US stocks may be in for another week of large losses and high volatility. Futures tracking major indices in the US were more than 1% lower before 8am (GMT +8).

US Futures Daily Change (%) Net Change Last Price As of (GMT +8)
Dow Futures -1.29% -286.00 21,140.00 7:57:43 AM
S&P500 Futures -1.36% -35.75 2,487.50 7:57:44 AM
Nasdaq Futures -1.23% -95.75 7,468.50 7:57:43 AM
*Source: Bloomberg

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

  • UK Feb Mortgage Approvals (4.30pm)
  • Eurozone Mar Consumer Confidence (F) (5pm)
  • Germany Mar Inflation Rate (Harmonised CPI/CPI) (P) (8pm)