Wall Street suffered another disappointing day and nursed aggressive losses on Thursday, having entered the corrective territory. Now, the Dow is down almost 10% for the year, while the S&P 500 is off 7.80%, and the Nasdaq has lost 4.53% year-to-date. Asian stocks followed the suit, with Japan’s Nikkei 225 plunging over 3.5% today. In Europe, stocks opened sharply lower on Friday, with the pan-European Stoxx 600 falling over 4% in early trade. In general, global stocks are set for their worst week since the financial crisis in 2008, as the MSCI World index is down 9%.
First cases of coronavirus have now been reported in New Zealand and Nigeria. China had confirmed 78,824 cases and 2,788 deaths, while South Korea confirmed an additional 256 cases to bring its total to over 2,000. On Thursday, the World Health Organization said that the outbreak has the potential to become a pandemic. All these headlines add to the gloomy picture and further fuel concerns over the outlook for the global economy.
As such, the safe-haven currencies like Japanese yen and Swiss franc are leading the gains. USDCHF fell to the lowest levels since September 2018 and now threatens the 0.96 handle. A break below this level could trigger another sell-off should risk-off tone persist any time soon.
Meanwhile, EURUSD extends gains despite risk aversion. The pair exceeded the 1.10 handle and reached the 100-DMA around 1.1050. This area may act as a local resistance on the way towards 1.11. should the upcoming German CPI and employment data disappoint, the common currency may trim gains and get back below 1.10 by the end of the day.
Elsewhere, gold prices are on the defensive as investors continue to take profit following the recent rally towards multi-year highs marginally below the $1,700 handle. Still, the downside potential for the bullion is limited due to safe-haven demand. The precious metal is changing hands around $1,630 after an earlier dip towards one-week low of $1,620. Should the selling pressure persist, the $1,600 psychological level may act as a support for gold prices.