European stocks slide as the number of covid-19 cases rise

European stocks declined today as traders reacted to the rising number of coronavirus cases in Europe. In Germany, the DAX declined by more than 1% after the government reported more than 7,500 new cases. That brought the total number in the country to more than 398k. In Spain, the cases rose by 16,000 while the total number of infections crossed the 1 million milestones. The same trend is happening in other European countries like France and Portugal. With a vaccine not ready yet, investors have now started pricing-in a double recession from the region.

American futures dropped as investors remained concerned about the upcoming election and the fact that a stimulus deal will not be passed before the election. Futures tied to the Dow Jones and S&P 500 are down by ~0.20%. Investors are also reacting to the ongoing corporate earnings. Coca-Cola, a Dow Jones constituent, said its revenue fell by 6% to $8.65 billion while its earnings per share increased to 55 cents. In the same quarter, Southwest Airlines reported its biggest loss ever. The company’s revenue fell by 68% to $1.79 billion. It lost more than $1.8 billion. On a positive note, Tesla made a profit for the fifth straight month.

The euro declined sharply as traders reacted to the rising covid-19 cases in Europe. It also reacted to the overall stronger dollar and the disappointing consumer climate data from Germany. According to the Gfk Institute, consumer climate dropped from -1.7 to -3.1 in November. The report cited the challenging environment as the unemployment rate remains relatively higher. Another report by McKinsey said that half of the European small companies face bankruptcy if the current economic conditions continue to worsen. Elsewhere, the Turkish central bank left the interest rate unchanged at 10.25%. 

EUR/USD

The EUR/USD price declined to an intraday low of 1.1820, which is lower than yesterday’s low of 1.1885. On the hourly chart, the price has moved below the 25-day and 14-day simple moving averages while the Relative Strength Index (RSI) has moved from the overbought level of 79 to 40. The price has also moved below the 23.6% Fibonacci retracement level. Therefore, it seems that it will continue falling as bears target the 38.2% retracement level of 1.1800.

GER30

The DAX index declined to an intraday low of €12,345, which was the lowest level since August 3. On the four-hour chart, the price is slightly below the dots of the Parabolic SAR. It is also below the 15-day and 25-day exponential moving averages. The Relative Strength Index (RSI) has moved to the oversold level of 30. Importantly, it has formed a hammer pattern, which is a sign that buyers will return and possibly push it above €12,800.

AUD/USD

The AUD/USD price is little changed today. On the four-hour chart, the price is along the 23.6% Fibonacci retracement level. It is also between the 14-day and 28-day moving averages. The signal and main line of the MACD have also moved above the neutral line. The pair has also formed a bullish pennant pattern. Therefore, the pair could remain in this level during the American session as traders wait for the preliminary PMI numbers from Australia.