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OVERNIGHT MARKET SNAPSHOT FOR TUESDAY 28/01/20 8:30am AEDT
- SPI200 (Mar) overnight futures down 89 pts to 6913
- SP500 down 51.84 pts to 3243.63
- NASDAQ down 175.60 pts to 9139.31
- Dow Jones down 453.93 pts to 28,535.80
- FTSE100 down 173.93 pts to 7412.05
- DAX30 down 371.91 pts to 13,204.77
- GOLD futures (Feb Contract) up $10.40 to $1588.60 an ounce
- COPPER futures (Comex Mar) down $0.087 to $2.597 a pound
- OIL futures US Session (Nymex Mar) down $1.43 to $52.76 a barrel
- CRB Index down 2.58 pts to 173.18
- AUDUSD trading at 0.6760
- EURUSD trading at 1.1020
- GBPUSD trading at 1.3056
- USDJPY trading at 108.8800
- USD Index US Session (ICE March) up 0.102 to 97.752
The US started the week well and truly on the back foot as traders showed concern for the economic impact of the Coronavirus outbreak in China. News outlets have been pumping the negative news and the potential for ‘Hollywood’ type proportions which has spooked investors and triggered some serious profit taking overnight pushing Indexes down off all time high levels. The move lower looks more like opportunistic profit taking than concern for the virus spreading as traders are having to assess the unknown. Fears that the extent of the spread may be worse than initially thought are also on traders minds. The move may be overdone as major US Indexes were overdue for a correction and the virus could not be factored into the action so was the perfect trigger. The major Indexes were hit hard in the overnight markets, with no support from the Asian session, which flowed into European and US trading. The DOW closed down 1.57% while the broader SP500 was down 1.57% and the Nasdaq also closed down 1.89% for the session. In Europe, major Indexes were hit hard from the open to give up a lot of the recent gains off their highs. The DAX moved down 2.74% while the FTSE was down 2.29% on concerns for the virus spreading.
US Bond yields were lower overnight to further flatten the yield curve. Traders moved out of riskier Equities and into the safety of Bonds with the news centered around the virus. Traders expect that there will be an economic impact but are not sure to what extent as it is all happening during a major consumer holiday in China. The yield curve between the 2 and 5-year bonds inverted which is usually a precursor to a recession. The first time the yield curve inverted was in March and triggered concern and selling into the markets.
The USD edged its way higher as traders sought the safety of the dollar on news the virus is spreading. The EURO moved lower in step with the rally in the USD selling down to key lows around 1.0990. The GBP is also in pullback mode moving lower with the next level of support coming in around 1.3035. The AUD was hit harder than other major currency pairs on its commodity links to China. It may take more for the AUD to find support as news continues to spook traders. If the Aussie can not find support around current levels then we may see an extended push down to 0.6700. The USDJPY continued to march lower on a safe haven bid into the YEN which easily outweighed the dollar strength.
Gold benefited from a dive into safe havens as the precious metal marches up to the 1600 zone. We expect to see some love into Gold producers, as Aussie Gold rallies hard, but it will depend on the fear floating around in the market and the strength of the bears on the open. Crude Oil continued its slide on concern for demand from China. At this stage, it is too early to assess the economic damage and the outbreak is still very minor at current levels…it is the ‘fear’ that has traders concerned. Copper also continued to nosedive through support and looks set to test lower on fears for weaker demand.
Cryptocurrencies rallied as share markets fell apart with traders moving out of risky assets for now. Bitcoin is currently trading at $8945.2 up 4.18% while Ethereum is at $170.85 up 2.48% and Ripple is currently at $0.23305 up 2.83%.
The ASX200 pushed up on the open Friday only to fade into the close ahead of a long weekend and in an extended environment. The Index was weighed down by Chinas’s virus concerns and traders were adverse to adding any risk at the end of the week. At the close the index ended up only 2.5 points to 7090.5 with gains in Healthcare, Financials and IT helping the ASX200 stay in the green. Rising stocks outnumbered declining ones by 576 to 548 and 385 ended unchanged.
The ASX200 is expected to open down 115/120 points as the Index has to play catchup with the rest of the market.
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ECONOMIC DATA OUT TODAY (AEDT)
CNY Bank Holiday All Day
AUD NAB Business Confidence 11:30am
EUR Spanish Unemployment Rate 7pm
USD Durable Goods Orders Data 12:30am
USD FOMC Member Williams Speaks 1:30am
USD Consumer Confidence and Richmond Manufacturing Index 2am
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SPI200 INTRADAY LEVELS TO WATCH
