U.S. stocks ended sharply lower overnight, with the S&P 500 snapping its five-day winning streak, as investors proceeded to profit-taking amid rising coronavirus cases in certain states. Several Federal Reserve officials warned of challenges to the economy amid the pandemic, which added to the negative sentiment in the market. As a result, the Dow Jones Industrial Average tumbled 1.5%, the S&P 500 index shed 1.1%, and the Nasdaq Composite Index fell 0.9%.
Today in Asia, stocks were mixed as an increase in new coronavirus cases in some countries cast doubts over the economic recovery. Japan’s Nikkei 225 dropped 0.77%, Australia’s S&P/ASX 200 dipped 1.54% and South Korea’s Kospi shed 0.24%. Hong Kong’s Hang Seng gained 0.4%, while the Shanghai Composite added 1.73%. also, investors keep a more cautious tone ahead of the second-quarter earnings season.
European equities opened lower on Wednesday for the second day in a row amid concern the coronavirus outbreak could stall the economic recovery. HSBC Holdings Plc stocks plunged by 4% after some of Donald Trump’s advisers proposed a move to punish banks in Hong Kong and destabilize the currency peg to the dollar. Rising U.S.- China tensions added to a cautious tone in the markets. However, U.S. stock futures are pointing to modest gains at the start of trading on Wednesday.
Elsewhere, the dollar is relatively steady today, with major currency pairs struggling for direction amid the persisting uncertainty surrounding the coronavirus developments and economic recovery. EURUSD struggles to regain the 1.13 handle despite a bullish intraday bias. In another sign of rising US-China tensions, China said that it is to restrict visas for US officials over the Tibet issue. Further negative developments on this front could fuel the safe-haven dollar demand. As such, EURUSD may give up its modest gains and come under the selling pressure during the day. If so, the pair may derail the 1.1260 intermediate support and retarget the 1.12 handle.
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