Global stocks continue falling as COVID-19 Risks Persist
European stocks and American futures dropped today as investors continued to worry about COVID-19. In Europe, the Stoxx index declined by more than 2.20% while the DAX and CAC dropped by 2.25% and 2.05%. This drop is the worst weekly performance since 2011. In the United States, futures tied to the Dow and Nasdaq dropped by 1.30% and 1.15% respectively. Market participants are getting more nervous about the disease. For example, the Japanese government has urged companies to embrace remote work. Shinzo Abe also urged all schools to close from Monday. Companies like Toyota, Danone, Microsoft, and Apple have warned that their performance will be hit this year.
The price of crude oil declined today as fears of low demand increased. Many airlines with Chinese routes have halted their trips. Also, some big Chinese cities like Hubei are on lockdown. The same has started to happen in countries like Japan and South Korea. This means that oil demand will be lower as IEA, OPEC, and EIA had warned before. Yesterday, data from EIA showed that US refinery inputs averaged 16 million barrels per day. This was 202k less than the previous week. The country imported 6.2 million barrels every day, which was 330k barrels lower than the previous week. Inventories rose by just 452k, which was slightly above the previous 414k.
The US dollar index dropped by more than 40 basis points today. This drop was partly because of coronavirus issues. Today, we received several important data from the US. Data from the Bureau of Economic Analysis showed that the economy grew by 2.1% in the fourth quarter as was widely expected. Durable goods orders dropped by -0.2% in January. This was the slowest growth since November last year. Personal consumption expenditure (PCE) rose by 1.3% in the fourth quarter. This was the slowest rate since the first quarter of last year. This is an important number that is watched closely by the Federal Reserve.
The AUD/USD pair rose to an intraday high of 0.6580. The 28-day and 14-day exponential moving averages have formed a bullish crossover while the RSI has moved to above 50. The strength of the Bulls Power has started to wane. There is a possibility that the pair will resume the downward trend because of the exposure of Australia’s economy to China.
The EUR/USD pair rose to an intraday high of 1.0948, which was the highest level since February 11. The price is slightly below the 38.6% Fibonacci Retracement level on the four-hour chart. The price is along the upper line of the Bollinger Bands while the average true range (ATR) has continued to rise. The average directional movement index has also continued to rise. The pair is likely to continue rising.
The GBP/USD pair dropped to an intraday low of 1.2860. It has been dropping since Tuesday when it was trading at 1.3018. The price is along the lower line of the Bollinger Bands. The RSI has moved to the oversold level of 30 while the two lines of RVI have crossed the centreline. The price may continue moving lower on Brexit and COVID-19 risks.