Asian stocks traded lower on Monday as investors expressed a cautious tone amid some tentative signs of progress in efforts to combat the coronavirus pandemic after the weekend saw glimmers of hope that the crisis may have peaked in some countries. Italy recorded its lowest death toll in three weeks on Easter Sunday while Spain reported the lowest daily virus case rise since March 20. Also, fatalities fell in France, while British Prime Minister Boris Johnson left the hospital.
Despite some positive signs stocks declined at the start of the week. Hong Kong and Sydney were closed for a public holiday while Japan’s Nikkei 225 index lost 2.3%. The Shanghai Composite index gave up 0.5% and the Kospi in South Korea shed 1.4%. European markets remain closed today for Easter Monday. U.S. stock index futures declined more than 1% on Monday after a decent rally last week, as investors express concerns ahead of the earnings season that could bring further evidence of the coronavirus-led damage to business in America.
Elsewhere, Fed’s Clarida said the central bank will keep rates near zero until the economy is back on track. He also highlighted that any talk of a rate increase is "a long way down the road". Despite the dovish comments, the greenback extended the recovery from an earlier decline witnessed at the start of the week. As such, EURUSD refreshed intraday lows around 1.09 after failed attempts to challenge the 50-DMA. After the upside momentum faltered ahead of the 1.0980 area, the selling pressure has reemerged and intensified following a break below 1.0950 in thin trade conditions due to the Easter Monday holiday.
Meanwhile, oil prices remain depressed, having declined below $32 despite the OPEC+ countries agreed massive output cuts by 9/7 million barrels per day. This step is not enough to rebalance the global oil market amid the declining demand, so the prices failed to capitalize on the agreement. To experience a sustainable recovery, Brent crude needs a peak in coronavirus pandemic and a surge in energy demand across the globe. At this stage, bearish risks continue to persist in the market, with the $39 handle remaining the key support in the daily timeframes.
As for other commodities, gold prices keep rising on Monday after a strong rally witnessed at the end of last week. The precious metal extended gains to the levels just shy of $1,694 and was rejected from local highs. However, the bullion remains positive in the daily charts and looks poised for further gains amid the prevailing risk-off sentiment.
Nathan Lambert, Head of Global FX Analytical Department