Wall Street stocks shed around 3% overnight, as the Fed’s unexpected decision to cut rates by 0.5% spooked investors who assessed the step as a sign that recession may be nearing. In Asia, the sentiment has improved somehow, with most major indexes saw a rise, extending this week’s recovery. European stocks opened higher on Wednesday but the upside momentum looks limited as market participants remain cautious, assessing the economic and financial risks from the coronavirus outbreak.
Elsewhere, according to preliminary data, China February car sales plunged by 80% y/y, the biggest decline on record. The final numbers scheduled to be released next week. Meanwhile, the PBOC continued to reaffirm their commitment to support the economy amid the virus outbreak in the country. In particular, the central bank said that prudent monetary policy will be more flexible, they will keep liquidity reasonably ample and will lower financing costs to help companies weather a difficult time. In Japan, the BoJ’s Kuroda said that the domestic economy is being supported by fiscal spending and risk impact of virus outbreak could be quite big given China’s presence.
On the data front, Spain February services PMI came in at 52.1 versus 52.5 expected. Italy’s PMI arrived at 52.1 versus 51.3 expected while the index in Germany declined from the 53.3 preliminary result to 52.5. In short, the figures came mixed and failed to affect the euro’s dynamics. EURUSD was rejected from above the 1.12 handle yesterday and has settled in a limited range on Wednesday, seeing a mild bearish slope in the daily charts. Still, despite the lack of upside momentum, the pair remains elevated as long as the prices stay above the key moving averages.
In other markets, bitcoin struggles to regain the $9,000 figure since last week. BTCUSD closed at the 200-DMA yesterday and has been making timid recovery attempts on Wednesday. The volatility in the pair has declined now, with the leading cryptocurrency by market capitalization continues to oscillate around the above mentioned moving average. As long as the token remains below $9,000, downside risks persist. The immediate support arrives at $8,600.