Financial market daily

Last trading session review

Another wild night for global markets! After Posting their biggest drop in nearly two years, Wall Street continued to tumble overnight, with the dow losing nearly 880 points to close 3.1 percent lower, for a two-day drop of 1,900 points. The dollar fell sharply below the 99 marks as expectations of a Fed rate cut grew, while spot gold continued to suffer from profit-taking and ended around $1,635.

The session will focus on U.S. new home sales in January, fed chair Kaplan and kashkari speeches.

Fx: eur/usd at 1.0879; GBP/usd closed at 1.3011; Australian dollar/us dollar 0.6604; Usd/jpy 110.20; Usd/cad closed at 1.3278; Dollar/Swiss franc closed at 0.9760.

Commodities: spot gold at $1,634.34 an ounce; Comex gold closed at $1,650.0 an ounce; Spot silver at $17.98 / oz; Comex futures closed at $18.191 an ounce; Brent closed at $54.95 / BBL; NYMEX crude closed at $49.90 a barrel.

In the currency market

The euro/dollar last traded at 1.0841 in New York, recovering modestly during the session, and was last trading around 1.0880. From a technical point of view, the MACD red kinetic energy column began to appear, KDJ index up into the overbought area, indicating that the exchange rate short-term upward momentum released again. The initial resistance on the upward side of the exchange rate is 1.0904, the further resistance is 1.0928, and the key resistance is 1.0965. The initial support for the decline of the exchange rate was 1.0843, further support was 1.0806, and more critical support was 1.0782.

GBP/USD: this session opened at 1.2984 and was slightly higher during the session before trading around 1.2999. Technically, the MACD red kinetic energy column is moderately stretched, and the KDJ indicator points above the midline, indicating that the near-term downside risk to the exchange rate has begun to decrease. The initial resistance to the upward movement of the exchange rate is 1.3043, the further resistance is 1.3082, and the more critical resistance is 1.3147. The initial support for the decline of the exchange rate is located at 1.2938, further support is located at 1.2874, and more critical support is located at 1.2834.

Usd/jpy: the session opened at 110.57 and continued to fall during the session, ending trading around 110.19. From a technical point of view, the MACD red kinetic energy column has contracted completely, and the KDJ index is down close to the oversold area, indicating that the exchange rate pullback pressure has been greater. The initial resistance to the upward movement of the exchange rate is at 110.86, further resistance is at 111.53, and the more critical resistance is at 112.02. The initial support for the decline of the exchange rate was 109.71, further support was 109.22, and the more critical support was 108.55.

The stock market

U.S. and European stocks: U.S. stocks continued to fall Tuesday as plunging bond yields raised concerns that the global economy is slowing significantly as a new coronavirus spreads. The yield on the 10-year Treasury note hit a record low, following Monday’s 1,000 point drop in the dow. The dow fell 879.44 points, or 3.1%, to 27,081.36. The dow posted its biggest one-day drop since February 2018 for two straight sessions, falling at least 800 points for the first time in a row. The s&p 500 fell 3% to 3,128.21, a rare sign of a streak of 3% declines (it hasn’t fallen more than 3% since the financial crisis of November 2008). The NASDAQ fell 2.8% to 8,965.61, turning negative for the year. Monday was the worst day for stocks in two years.

European stocks fell on Tuesday as investors worried about the spread of the new coronavirus in Italy and around the world. The pan-European Stoxx 600 index temporarily fell 1.8 percent, with all sectors in the red. France’s CAC was the worst-performing of the main exchanges, falling by 2%.

The bond market

The yield on the 10-year U.S. Treasury note fell to a record low on Tuesday as the new virus raised concerns about global economic growth and sent investors scrambling for the safety of treasuries. In early trading, the yield on the benchmark 10-year Treasury note fell about 6 basis points to 1.312%, down from a record low of 1.325% hit after the Brexit vote on July 6, 2016. The yield on the 30-year Treasury note fell more than three basis points to a record low of 1.798 percent. Long-term deposit and lending rates have fallen about 40 basis points this year. Bond yields fall as prices rise.

Commodity markets

Spot gold fell $24.86, or 1.52 percent, to close at $1,634.34 an ounce after hitting a low of $1,627.30 on Tuesday morning in Asia.

COMEX gold for April delivery closed down $26.6, or 1.59 percent, at $1,650.0 an ounce.

U.S. WTI crude for April delivery fell $1.53, or 3 percent, to $49.90 a barrel on Tuesday, its lowest close since Feb. 10. Brent crude for April delivery closed down $1.35, or 2.4 percent, at $54.95 a barrel on Tuesday, its lowest close since Feb. 11. Oil prices ended the third day in a row lower as the spread of the disease outside China threatened to increase demand. U.S. WTI crude hit an intraday low of $49.69 a barrel, while Brent hit an intraday low of $54.62.

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