Safe havens soar, global stocks fall on renewed covid-19 tensions
Asian and European, along with American futures dipped today on renewed concerns over covid-19. Safe havens like gold, treasuries, and the yen rose while the price of crude oil dropped. The main concern is that the disease is spreading in other countries like Japan and South Korea. The main concern is that many businesses, which do business in Asian countries could be affected. Companies like Apple, Pearson, Toyota, and Hyundai have warned about their business this year. Others that have warned are luxury goods companies like Kering and LVMH. The DAX, Stoxx, and CAC fell by 20, 6, and 12 points respectively. In Asia-Pacific, the Hang Seng, A50, and ASX dropped by 300, 65, and 25 points respectively. In the United States, futures tied to the Dow and S&P500 declined by 108 and 15 points.
The euro wobbled today after the market received upbeat PMI data. Preliminary EU manufacturing data rose from 47.9 to 49.1 this month. A PMI number below 50 is usually a sign of contraction. Still, the recent trend shows that the manufacturing recession is ending. The number has been rising after reaching a low of 45.6 in September last year. The flash services PMI rose 52.5 to 52.8 while the composite PMI remained unchanged at 53.3. Meanwhile, consumer prices remained steady in January. The headline and core CPI were unchanged at 1.4% and 1.1% respectively.
The price of crude oil declined today as risks of covid-19 rose. Reports from Bloomberg and other media organizations have said that activity in China is slowing. This is risky for crude oil because China is the biggest oil consumer in the world. Just last week, OPEC, EIA, and IEA said they expected a lower demand for the year. Meanwhile, the US is continuing to pump more oil. Yesterday, data from the EIA showed that inventories rose by just 414k barrels. This is after rising by more than 7 million barrels in the previous week.
The rally of XBR/USD pair ended today. The pair, which reached a weekly high of 59.55 yesterday declined by almost 2%. It is now trading at 57.70. This price is below the 14-day and 28-day exponential moving averages. As the pair dropped, it formed a bearish engulfing pattern, which is usually a bearish signal. Meanwhile, the RSI has ben on a downward trend as shown below. The price is between the 23.6% and 38.2% Fibonacci Retracement levels. The pair may continue moving lower during the American session.
The troubled Australian dollar continued to weaken today. The AUD/USD pair declined by 30-basis points, and is trading at 0.6595, which is the lowest level since the 2008/9 financial crisis. On the four-hour chart, the pair is at the most oversold level since July last year based on the RSI. The momentum indicator too has continued to decline. The average directional movement index has continued to rise while the price is below the Ichimoku cloud. The pair may continue to drop.
The USD/JPY pair dropped from a high of 112.22 to an intraday low of 111.50. The price has been on an upward trend since January 7, when it was trading at 107.65. The price is along the middle line of the Bollinger Band on the four-hour chart. The RSI has moved from 90.57 to a low of 72 while the average true range has soared. This is a sign of rising volatility. The pair may continue moving lower during the American session.