After a negative session in Asia, European stock markets turned negative as well amid the deepening coronavirus crisis. Italy and Spain have reported over 115,000 and 112,000 cases, respectively, while Germany now has more than 84,000 cases. Moreover, the number of confirmed cases of the coronavirus worldwide surpassed 1 million overnight.
On the data front, the IHS Markit composite PMI for the Eurozone plunged from 51.6 in February to an all-time low of 29.7 in March, which is the largest single-month drop since the index began in 1998. The data shows that the regional economy is already contracting decently. The service sectors in Italy, Spain and France all showed the deepest recession on record last month.
Against this backdrop, UK’s FTSE 100 sheds 1.31 percent to 5,408, Italy’s FTSE MIB loses 1.50 percent to 16,581. France’s CAC 40 declines by 0.79 percent to 4,187, while German DAX 30 gives up 0.30 percent to 9,542. U.S. stock index futures are pointing to a weaker session on Friday, leaving Wall Street on track for another week of losses ahead of the key employment data.
In currencies, the dollar continues to set the tone for major pairs. EURUSD plunged below 1.08 and could threaten the 1.0630 lows should the safe-haven USD demand persist in the near term. Dismal European data, rising coronavirus cases in Italy and Spain, and a stronger dollar are putting the common currency under strong downside pressure. Furthermore, weak US NFP jobs numbers could fuel risk-off trends, which is euro-negative as well. The immediate support now arrives at 1.0750.
Brent crude resumed the ascent after a short-lived rally amid Trump’s comments on the possible Russian-Saudi Arabian supply cuts. On Friday, Brent has climbed above $33 but was rejected from intraday highs. Now, the prices are trying to regain this level so that to retarget $36 afterward. However, the market won’t be able to shift into a sustainable recovery mode unless the key producers take the actual steps to support prices, while the ongoing speculations are not enough to fuel a strong rally.
Meanwhile, gold prices are trading flat following two days of gains. The precious metal has recovered back above $1,600 and now needs to see a daily and weekly close above this psychological level so that not to turn negative again. Considering that risk-off trends prevail in the global financial markets, the bullion will at least refrain from a retreat in the near term. On the upside, the immediate resistance arrives at $1,620, where yesterday’s highs lie.
Nathan Lambert, Head of Global FX Analytical Department