Wednesday, April 1, 2020

Asia Times: DJIA ends first quarter of 2020 23.20% lower thanks to the coronavirus crisis

Tags
  • Dollar
  • Gold
  • Yen
  • Stocks
  • Oil
  • ISM PMI
  • US payrolls

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Market Recap: DJIA ends first quarter of 2020 23.20% lower thanks to the coronavirus crisis

Stocks in the US fell on Tuesday to end one of the worst quarters in history. The DJIA and S&P500 ended the quarter 23.20% and 20.00% lower, the worst for the DJIA since 1987. The Nasdaq's performance was better, dropping 14.18% over the first quarter of 2020. The drop on Tuesday was possibly due to market makers and larger retail investors taking profits off of the rally from last week, as well as the general market reducing their risk exposure ahead of employment data set to be released today (ADP private employment change), tomorrow (Initial jobless claims) and on Friday (NonFarm payrolls). Volatility looks to be somewhat easing in the financial markets, with the fear gauge, VIX, falling for the second consecutive day, to 53.54.

Indexes Daily Change (%) Net Change Closing Price
Dow Jones -1.84% -410.32 21,917.16
S&P500 -1.60% -42.06 2,584.59
Nasdaq -0.95% -74.05 7,700.10
*Source: Bloomberg

Currencies were mixed, although the Dollar Index declined for the second day in a row, marking its seventh drop out of the last eight trading sessions. The Dollar Index's retreat was likely thanks to the Fed opening a temporary repo facility for foreign central banks. The repo facility is meant to allow central banks to swap their holdings for the greenback, which should be able to reduce volatility of the bonds market. The temporary repo facility will start on April 6th and last for at least six months.

Oil-related currencies led gains among major currencies, after it was reported that energy officials from the US and Russia may meet to discuss possible solutions to the falling oil prices after both sides agreed that low oil prices were not beneficial to either of them. The Canadian dollar advanced 0.67% as a result.

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Safe haven assets were once again mixed on Tuesday. Gold fell sharply along with two-year US Treasuries while yen and the longer-term five-year and 10-year US Treasuries gained.

Safe Haven Assets Daily Change (%) Net Change Closing Price
Gold -2.79% -45.33 1,577.18
Silver -0.53% -0.07 13.86
JPY +0.20% +0.22 107.54
*Source: Bloomberg
US Treasury yields Daily Change (bps) Yield (%)
2-Year +1.7 0.25%
10-Year -5.7 0.67%
30-Year -1.5 1.32%
*Source: Bloomberg

Oil markets were mixed on Tuesday. The UK's Brent crude oil benchmark inched slightly lower by 0.26% while the US' WTI benchmark gained 1.94% after news that US and Russian energy officials would be meeting to discuss oil prices. But it is likely that the US will need to reduce its sanctions on Russia or Rosneft for the two sides to come to a deal. Also likely, is that Russia is meeting with the US to mitigate risk that Saudi Arabia will meet with the US before them.

Oil Futures Daily Change (%) Net Change Closing Price
Brent Crude -0.26% -0.07 26.35
WTI Crude +1.94% +0.39 20.48
*Source: Bloomberg

The Nikkei index continues to fall on Wednesday morning, as the strengthening yen threatens the country's competitiveness on its exports. The rest of Asia fared slightly better. KOSPI and ASX200 were trading higher in their first hour of Wednesday's trading session.

Asia Daily Change (%) Net Change Last Price As of (GMT +8)
Nikkei Index -1.85% -349.81 18,567.20 8:28:25 AM
KOSPI Index +0.17% +2.95 1,757.59 8:48:20 AM
ASX200 Index +3.03% +153.77 5,230.60 8:48:05 AM
*Source: Bloomberg

US futures were lower on Wednesday however, as the outlook for the virus in the US grows dimmer. US President Donald Trump warned US citizens in a press conference late on Tuesday in the US that the next two weeks will likely be challenging for the US. Top public health officials in the US revealed that they estimated deaths in the US could range from 100,000 to 200,000 even with the most stringent mitigation measures in place. Futures tracking major indices in the US sank as a result, falling more than 1% by 8.46am (GMT +8).

US Futures Daily Change (%) Net Change Last Price As of (GMT +8)
Dow Futures -1.09% -237.00 21,514.00 8:46:25 AM
S&P500 Futures -1.10% -28.25 2,541.25 8:46:31 AM
Nasdaq Futures -0.84% -65.25 7,721.00 8:46:28 AM
*Source: Bloomberg

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

  • China Mar Manufacturing PMI (Caixin) (9.45am)
  • US Mar Private Employment Change (ADP) (8.15pm)
  • US Mar Manufacturing PMI (ISM) (10pm)