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OVERNIGHT MARKET SNAPSHOT FOR WEDNESDAY 26/02/20 (as at 8:15am AEDT)
- SPI200 (Mar) overnight futures down 162 pts to 6664
- SP500 down 97.68 pts to 3128.21
- NASDAQ down 255.67 pts to 8965.61
- Dow Jones down 879.44 pts to 27,081.36
- FTSE100 down 138.95 pts to 7017.88
- DAX30 down 244.75 pts to 12,790.49
- GOLD futures (April Contract) down $39.40 to $1637.20 an ounce
- COPPER futures (Comex May) down $0.017 to $2.567 a pound
- OIL futures US Session (Nymex Mar) down $1.63 to $49.80 a barrel
- CRB Index down 2.08 pts to 168.49
- AUDUSD trading at 0.6602
- EURUSD trading at 1.0885
- GBPUSD trading at 1.3005
- USDJPY trading at 110.1500
- USD Index US Session (ICE March) down 0.381 to 98.903
US Indexes were hit hard for the second session in a row as traders left risk assets for safe havens after comments from the Centers for Disease Control and Prevention (CDC) that the US faced further spread of the coronavirus. The CDC said that Americans should prepare for the ‘inevitable’ spread of the virus and that there will be disruptions to everyday lives. This is is contrast to the attempted supportive comments from the White House that the virus is contained ‘pretty much airtight’. The US 10-year Bond yield set an all time low on safe haven bond buying. The spread of the virus continues and many countries have accelerated emergency measures which does not match with to the Government rhetoric that the virus is being contained. Traders are re-evaluating risk and moving to the sidelines as nobody knows how to accurately estimate the potential near term global economic impact of the virus. The DOW closed down another 3.15% while the broader SP500 was down 3.03% and the Nasdaq ended down 2.77% for the session. In Europe, major Indexes followed the sentiment lower as fear continues to grip the action sending buyers running for the sidelines. Investors are coming around to the idea that the central banks are not equipped to support the markets through rate cuts as this will do nothing to stimulate weakness in supply chains. People are foregoing travel commitments and are not going to restaurants and other daily activities which will have a flow on effect to the economy and as the virus spreads, this will take its toll on economic data down the line.
The USD Index again took a nosedive at the start of the US session as traders bailed on shares and reversed the carry trade into the USD. There could be increased pressure on the dollar in the near term as traders further unwind risk into the Equity market and repatriate funds. The dollar also came under pressure from expectations that the US Fed Reserve will be forced to cut rates. The EURUSD saw a good rally as the USD came under pressure to erase earlier weakness into the currency pair through the European session. If the USD continues lower along with share indexes then expect to see a further squeeze higher on Euro bears. The GBPUSD also rose on dollar weakness and US rate cut expectations. The Pound also gained as traders move funds to Sterling as an alternative to global trade related economies such as the EU and US. The pairs gains may be short lived as Brexit concerns continue. The AUDUSD continued to find some support around the 0.6585 zone although sellers continue to hold lower highs into the level. If the USD rallies after the few days on weakness, then the risk is that selling pressure will pile into the AUD to break below the support level. Expect that any buying will be contained by virus and global trade concern. The USDJPY traded lower as the Dollar fell and safe haven YEN buying helped pressure price lower.
SPOT GOLD continued to fall even as other safe havens rallied. There was news that the selloff was triggered yesterday by a massive sell order into the futures market as options expiry approaches and someone is on the wrong side of the action. The move also correlates to a potential margin call and some profit taking to cover the margin requirements. Either way, the sell order has triggered other profit taking which has pressure gold lower against the flow of the safe haven buying. Crude Oil naturally came under fire on demand concern as the Global economy is expected to come under pressure due to the virus leading to a spike lower in demand for the commodity. Copper found selling pressure to push the metal price down towards support levels.
Cryptocurrencies fall along with other markets and not acting like the hedge to fiat currencies that some hoped as traders get the jitters and are happy to step out of the action. Bitcoin is currently trading at $9370.1 down 2.61% while Ethereum is at $250.20 down 5.27% and Ripple is at $0.25521 down 5.06%.
The ASX200 was a sea of red yesterday and will be again today as all sectors came under pressure while the Gold sector was surprisingly the worst performer ending down over 3.6%. In the end the ASX200 was down another 111.7 points to 6866.6 to follow on from the previous sessions thumping. Along with the Gold sector, the next worse performers were Telecom Services and Consumer Discretionary. Falling stocks outnumbered advancing ones by 1074 to 258 and 265 ended unchanged.
The ASX200 is expected to open down another 160 points as the SPI200 continued to meltdown with major markets in a risk off tone.
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ECONOMIC DATA OUT TODAY (AEDT)
AUD Construction Work Done 11:30am
JPY BOJ Core CPI 4pm
USD FOMC Member Kaplan Speaks 1:45am
USD New Home Sales 2am
USD Crude Oil Inventories 2:30am
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SPI200 INTRADAY LEVELS TO WATCH
