In a reaction to the shutdown taking place in Europe, regional stocks plunged on Monday, extending the sell-off from last week. Spain has imposed a 15-day nationwide lockdown, France and Germany have also and fortified borders while the U.K. government is facing growing calls to take more drastic measures to prevent the spread of the new coronavirus.
Also, stocks have been declining in a reaction to the Federal Reserve decision to cut the interest rate to zero and launch a massive quantitative easing program. Other central banks also imposed supportive measures byt it did little to ease investor concerns. According to the latest reports, the EU leaders have agreed to enact measures on external borders in the coming hours.
Against this backdrop, UK’s FTSE 100 sheds 6.80 percent to 5,002, Italy’s FTSE MIB declined by 9.08 percent to 14,505. France’s CAC 40 loses 8.58 percent to 3,764, while German DAX 30 plunges by 7.47 percent to 8,542. U.S. stock index futures signal deep losses before the official open despite the Fed’s rate cut as the coronavirus cases continue to soar in the country. Nike closed stores in North America and Apple shut all stores outside of China.
In currencies, the dollar is mosly lower across the board on Monday but the downside momentum is limited due to a safe-haven demand for the US currency. on the negative side, the dillar’s appeal has eased after the measures taken by the Federal Reserve. Anyway, EURUSD struggles to get back above the 1.12 handle, GBPUSD was rejected from the highs above 1.24 registered earlier in the day while USDJPY derives support around 105.70 despite a bearish correction from the levels around 108.50 reached last Friday.
In commofities, Brent crude refreshed long-term lows below $31 and is now threatening the $30 handle. Obce below, the futures may suffer further losses despite the oversold conditions as the coronavirus continues to cause a massive decline in crude oil demand carross the globe while the OPEC+ technical committee was canceled. In these circumstances, large prosucers may decide not to pamp up production next month, which may support the market somehow. Still, the downside risks continue to persist in the market as long as the disease has been spreading further. On the downside, the next support arrives at $29.90 and then around $27.
Nathan Lambert, Head of Global FX Analytical Department