Global stocks dampen after Trump warns of likely Coronavirus deaths
Global stocks turned lower today as investors reacted to a warning by Donald Trump. In a statement yesterday, the president revealed that between 100k and 250k Americans would die from Coronavirus. This will be a dramatic increase from the current deaths of more than 4k people. More than 188k Americans have been infected with the disease. In Asia, the Shanghai Composite and Nikkei dropped 0.57% and 4.50% respectively. In Europe, the DAX, FTSE, and CAC dropped by more than 3% while American futures showed that the Dow, Nasdaq, and the S&P would drop by more than 2%.
The Japanese yen was relatively unchanged as the market reacted to dark news from the central bank. The report showed that sentiment among the country’s large manufacturers declined to the lowest level since the 2008/9 financial crisis in the first quarter. The weak sentiment came from both large and small businesses in the manufacturing and services sectors. The large manufacturer's sentiment declined to -8 from the previous zero. In addition, industry executives are forecasting a tough period in the next three months. The challenge for Japan is that it has been going through a challenging period even before the Coronavirus pandemic.
The US dollar rose against major currency pairs after ADP and Moody’s released the private payrolls numbers. The data showed that the private sector lost more than 29k people in the month. Most of these job cuts were in the services sector while manufacturing held steady. Further, most companies that laid-off staff were small ones that have less than 50 employees. These were offset by larger employers who added more jobs. For example, retailers like Amazon and Walmart have added more temporary workers to help them deal with the demand. We will receive the jobless claims data tomorrow and the official jobs numbers on Friday.
The GBP/JPY pair declined and then pared back those losses as the market received negative PMI data from the UK. The manufacturing PMI dropped from 51.7 to 47.8. The pair is trading at 133.08, which is slightly higher than the day’s low of 132.54. This price is below the support level shown in yellow below. It is also below the 14-day and 28-day exponential moving averages while the RSI has been relatively unchanged. The pair may remain in the current channel and breakout in either direction in the near term.
The CAC 40 index declined to an intraday low of €4,188 as sentiment in Europe weakened. This was the lowest price since March 26. On the hourly chart, the price is slightly below the 14-day and 28-day exponential moving averages and slightly above the 61.8% Fibonacci Retracement level. The amount of volatility has weakened as shown by the average true range indicator below. The index may continue to decline especially if Wall Street falls today.
The EUR/USD pair declined after the employment data from the US. The pair reached a low of 1.0925, which was an important level of support as shown below. The pair is below the 14-day and 28-day exponential moving averages and between the 50% and 38.2% Fibonacci Retracement level. Also, the pair has moved below the triangle pattern from yesterday. Therefore, the pair may drop further ahead of the jobless claims data tomorrow.