Gains in equities will likely be limited as investors keep a more cautious tone amid recent developments
US stocks and Treasury yields fell on Monday, as investors expressed concerns over the outlook for the economy amid the news about a new coronavirus strain that overshadowed the news of a second pandemic relief bill agreed in Washington on Sunday. As a result, the S&P 500 fell 0.39%, the Dow Jones rose 0.12%, and the Nasdaq Composite slipped 0.10%.
Today in Asia, stocks extended losses amid fears a new strain of COVID-19 could lead to a slower global economic recovery after countries across the globe shut their borders to Britain due to fears about a new strain of coronavirus. As such, MSCI’s gauge of Asia Pacific stocks outside Japan fell 0.75%. Tokyo’s Nikkei 225 fell 1.04%, Hong Kong’s Hang Seng lost 0.75%, the Shanghai Composite index dipped nearly 2%, while Australia’s S&P/ASX 200 gave up 1.05%.
Following yesterday’s decline, European stock markets found some stability to start the day on Tuesday as the risk-on tone seems to be improving somewhat. At the same time, gains in equities will likely be limited as investors keep a more cautious tone amid recent developments. The pan-European Stoxx 600 traded up 0.7% in early morning deals, with Germany’s DAX index rising nearly 1%.
Meanwhile, the dollar is back on the offensive but still lacks the upside momentum to see a more robust recovery as the risk-off tone has been waning gradually. EURUSD was trying to hold above the 1.2200 figure at the time of writing, down nearly 0.30% on the day. The key support is represented by the ascending 20-DMA that arrives marginally above the 1.2100 figure.
Elsewhere, gold prices are back under pressure following a failed attempt to break above the 100-DMA on Monday. As a result, the precious metal retreated back below the $1,900 handle while holding above the $1,865 area during the European hours on Tuesday. If the pressure intensifies any time soon, the bullion could threaten the $1,855 region in the short term.
