European stocks tumble as risks of extended shutdown mount
The price of crude oil tanked today as the market focused on the reality of low demand and high supplies. Brent, the global benchmark, dropped by more than 5% while WTI dropped by more than 6%. The main concern among traders is that the ongoing lockdown and halt of air transport will have a negative implication on demand. At the same time, they fear that increased production by OPEC and Russia will affect the price. Another concern is that Saudi Arabia appears comfortable with the current pricing since the country’s leaders have not talked about the crisis. Still, a solution could come from Donald Trump, who could intervene and force Saudi to slash production.
European stocks declined today as investors continued to worry about Coronavirus. Over the weekend, the number of cases in the region continued to soar, which raises the likelihood of a longer-than-expected lockdown. As evidence of how dire the situation is, the German council of advisors released a weak forecast for the economy. They now expect the economy to slip into a recession in the first half of this year. They expect the economy to weaken by 2.4% this year and by 3.7% in 2020. In addition to this, investors are expecting more rate downgrades for more European economies. This is after Fitch issued a significant downgrade for UK debt.
US futures struggled for direction as investors worried for a longer lockdown. Yesterday, Donald Trump said that he would continue his social distancing policy to the end of April. This was longer than expected since he had talked about reopening the economy by Easter. In addition to this, investors are concerned about the impacts of low oil prices, especially on the energy sector. Most companies in the sector are highly indebted and most of this debt will be due in the next few years. As such, analysts expect many companies to file for bankruptcy. Finally, investors are worried that the biggest stimulus package in US history will not be enough.
The EUR/USD pair declined from Friday’s high of 1.1150 to an intraday low of 1.1065. On the hourly chart, the price is along the 50% Fibonacci Retracement level. The pair has also completed the first phase of the Elliot wave and is now in the corrective wave. This means that the price may decline to about 1.1050 before rebounding.
The XBR/USD pair declined to an intraday low of 26.33 as investors worried about demand. This was the lowest level since March 18. On the hourly chart, the price is below the Ichimoku cloud while the signal line of the MACD is below the neutral line. The two lines of the Stochastic Oscillator have emerged from the oversold level. The pair may continue declining unless there is a major development in the oil sector.
The BTC/USD pair attempted to rebound after falling to a low of 5,702 earlier today. The pair is now trading at 6,370, which is slightly below Friday’s close of 6,675. On the hourly chart, the price is along the 14-day and 28-day exponential moving averages. The RSI has moved from an intraday low of 11 to more than 50 while the Chaikin oscillator is slightly above zero. The pair may continue rising as it attempts to move to its Friday’s close.