Tuesday, April 7, 2020

Asia Times: Equities across the globe surge on Monday as new cases of the virus decelerates in hardest hit European countries

Tags
  • Dollar
  • Gold
  • Yen
  • Pound
  • Stocks
  • Oil
  • RBA

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Market Recap: Equities across the globe surge on Monday as new cases of the virus decelerates in hardest hit European countries

US equities spiked up on Monday as the coronavirus outbreak started to peak in several hot spots. Deaths from the virus in New York started to show signs of slowing, while the number of new cases in Italy, France, Germany and Spain started to decelerate. Each of the major indices in the US surged more than 7% as a result.

IIn sector news, the technological sector led gains in the S&P500, rising 8.78% on Monday. This was followed by the utilities and the consumer discretionary sector, which advanced 7.85% and 7.73% respectively. Consumer staples and energy stocks fared the worst among S&P500 sectors, rising 3.92% and 5.15% respectively. The S&P500 is now 21.34% lower from its record high in February earlier this year, compared to 33.92% at its bottom on March 23rd.

Indexes Daily Change (%) Net Change Closing Price
Dow Jones +7.73% +1,627.46 22,679.99
S&P500 +7.03% +175.03 2,663.68
Nasdaq +7.33% +540.16 7,913.24
*Source: Bloomberg

Risk appetite rose in the foreign exchange market as well, pushing commodity-linked currencies higher on Monday. The Australian, New Zealand and Norwegian currencies gained the most among major currencies on Monday, each rising more than 1%. The International Monetary Fund (IMF) signalling a possible new program to help liquidity for the dollar also likely helped most currencies to gain against the greenback. Sterling weakened against the dollar on Monday however, after British Prime Minister Boris Johnson was reportedly placed in to intensive care after Johnson's coronavirus infection worsened after being hospitalized.

The Australian dollar may trade slightly muted ahead of the RBA's monetary decision. The RBA however, is unlikely to make any changes to monetary policy after its emergency meeting on March 18th. It is more likely that RBA officials will discuss more on its new quantitative program and make any changes to it if needed.

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Most safe haven assets fell on Monday with the exception of gold. The precious metal advanced 2.48% on Monday, possibly as investors shift away from devalued currencies as more central banks across the world eases policy to fight the economic impact of the virus outbreak. The Japanese yen weakened 0.62% against the dollar and US Treasuries fell across the board. Benchmark 10-year yields rose 7.5bps to 0.67% as a result.

Safe Haven Assets Daily Change (%) Net Change Closing Price
Gold +2.48% +40.16 1,660.97
Silver +4.28% +0.62 14.25
JPY -0.62% -0.67 109.22
*Source: Bloomberg
US Treasury yields Daily Change (bps) Yield (%)
2-Year +3.3 0.26%
10-Year +7.5 0.67%
30-Year +6.9 1.28%
*Source: Bloomberg

Oil futures fell on Monday after OPEC+ reportedly delayed an emergency meeting called by Saudi Arabia for members to discuss the extremely low oil prices. The meeting has been postponed to April 9th, Thursday, a day ahead of the G20 meeting. Saudi Arabia's monthly official selling prices were also held back to later this Thursday from Sunday. Both Brent and WTI crude futures were down on Monday after two days of double-digit gains last week. But positive comments from the US government on a call between US and Saudi energy officials allowed the rally to continue early on Tuesday. Brent and WTI crude futures were 1.15% and 2.72% higher on Tuesday as of 8.49am (GMT +8).

Oil Futures Daily Change (%) Net Change Closing Price
Brent Crude -3.11% -1.06 33.05
WTI Crude -7.97% -2.26 26.08
*Source: Bloomberg

In Asia, stocks look set for a second day of gains as the Nikkei, KOSPI and ASX200 were all higher in the first hour of Tuesday's trading session. Futures tracking major indices in the US were slightly higher as well.

Asia Daily Change (%) Net Change Last Price As of (GMT +8)
Nikkei Index +2.12% +393.52 18,969.82 8:40:30 AM
KOSPI Index +1.66% +29.66 1,821.54 9:00:30 AM
ASX200 Index +1.73% +91.59 5,378.40 9:00:05 AM
*Source: Bloomberg
US Futures Daily Change (%) Net Change Last Price As of (GMT +8)
Dow Futures +0.27% +60.00 22,548.00 8:51:38 AM
S&P500 Futures +0.25% +6.50 2,651.00 8:51:38 AM
Nasdaq Futures +0.03% +2.50 8,032.25 8:51:38 AM
*Source: Bloomberg

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

  • RBA Monetary Policy Decision/Statement (12.30pm)
  • Japan Feb Leading Index (P) (1pm)
  • Germany Feb Industrial Production (2pm)