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OVERNIGHT MARKET SNAPSHOT FOR TUESDAY 25/02/20 (as at 8:15am AEDT)
- SPI200 (Mar) overnight futures down 168 pts to 6761
- SP500 down 97.81 pts to 3239.94
- NASDAQ down 355.31 pts to 9221.28
- Dow Jones down 1031.40 pts to 27,961.01
- FTSE100 down 32.72 pts to 7403.92
- DAX30 down 84.67 pts to 13,579.33
- GOLD futures (April Contract) up $12.50 to $1661.30 an ounce
- COPPER futures (Comex May) down $0.039 to $2.557 a pound
- OIL futures US Session (Nymex Mar) down $2.10 to $51.28 a barrel
- CRB Index down 4.08 pts to 170.57
- AUDUSD trading at 0.6603
- EURUSD trading at 1.0854
- GBPUSD trading at 1.2929
- USDJPY trading at 110.7100
- USD Index US Session (ICE March) up 0.012 to 99.200
US Indexes sank like a stone as virus fears grip traders in a risk-off tone to the session and global markets go corrective across the board. The fall in major US Indexes was the biggest in nearly two years as the extend of the impact of the coronavirus finally sank in and global growth fears peaked. Bond market yields rallied and the yield curve between the US 3-year and 10-year bonds continued to invert as traders dumped shares for the safety of the government backed assets. The fear now is that the impact to global growth is going to be a lot worse than originally expected as virus cases are now reported internationally. The DOW closed down another 3.56% while the broader SP500 was down 2.93% and the Nasdaq ended down 3.71% for the session. In Europe, major Indexes also came under fire as traders were quick to lock away some gains on the open of the session as prices broke below key support levels. The number of new cases have not changed significantly but the concern is the geography which could cause a ‘pandemic’ as traders try to predict when the spread will peak. More accurate data on the potency of the virus can now be assessed outside of China and the rate of contamination seems worse than originally thought.
The leg lower could be another step toward recession in more countries that were already fragile to begin with. South Korea government declared a high alert while Italy goes into lockdown. Other countries such as Iran, Saudi Arabia, Kuwait, Iraq, Turkey and Afghanistan have imposed travel and immigration restrictions as the idea of containment has been firmly banished.
The USD Index took another turn lower as traders dumped stocks and ran to safe haven assets. The move in the dollar shows the extent of the fears as the dollar can be a safe haven but the selling pressure indicates the flow of major funds out of the US equity markets and a potential reversal in the carry trade. We expect to see further pressure on the dollar if the fear driven moves in share markets continue. The EURUSD managed to rally off a higher low to pressure sellers for a short squeeze as the dollar fell. The trading was still choppy and linked to the USD moves rather than any change in the outlook for the European economy. The GBPUSD initially sank lower at the start of the European session as the FTSE Index took a hit. Prices were later supported by a move lower in the USD. The AUDUSD came under pressure but buyers were happy to support prices around the 0.6585 zone through Asian and European trade as the USD came under pressure to limit the virus driven selling into the Aussie Dollar. The USDJPY moved lower but was more contained than expected considering the spike in fears levels of investors. The Move lower was muted as the safe haven move into the YEN was limited.
SPOT GOLD spiked with eyes firmly set on the $1800 zone thanks to safe haven buyers. Price did see some profit taking into the US session as some heat come out of the action. Crude Oil came under pressure right from the open of the Asian session as price pushed down into key longer term support. Bulls did react off support to lift price into the US close although the move may be due to intraday short sellers covering into the end of the session. Copper also held above key longer term support but was under pressure for most of the overnight session.
Cryptocurrencies also fell and came under pressure as buyers bailed on the idea of a safe haven in cryptos. Bitcoin is currently trading at $9588.3 down 2.95% while Ethereum is at $263.08 don 2.92% and Ripple was hit harder and is trading at $0.26743 down 5.15%.
The ASX200 was hit hard yesterday and we expect more of the same today as traders concern for the coronavirus peaked over the weekend and saw Global Indexes fall on the open. The ASX200 ended the session down 160.7 points, or 2.25%, to 6978.3 to wipe off the previous few weeks of gains. It was a sea of red as the Energy, Consumer Discretionary and IT sectors led the charge lower all ending down close to 4% while Gold stocks were up strong with the sector gaining over 4% for the day. Falling stocks outnumbered advancing ones on by 1067 to 266 and 234 ended unchanged.
The ASX200 is expected to open down 165 points as the SPI200 capitulated with global market indexes overnight.
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ECONOMIC DATA OUT TODAY (AEDT)
EUR German Final GDP 6pm
USD HPI 1am
USD Consumer Confidence and Richmond Manufacturing Index 2am
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SPI200 INTRADAY LEVELS TO WATCH
