Asian stocks bounced on Tuesday after a deep sell-off across the global markets at the start of the week. The massive plunge in stocks was fueled by a 30% decline in oil prices after Russia rejected the initiative to make additional oil output cuts and exited the OPEC+ deal. After the panic sell-off on Monday, Brent managed to bounce from lows around $31 and has been targeting the $37 handle today.
Following local gains in Asia, European stock markets opened higher as well, recovering yesterday’s losses, with Italy’s FTSE MIB suffered the most aggressive losses at the start of the week. Now, all the major regional indices are gaining more than 3% on the day, with US futures pointing to a positive open.
On the data front, Eurozone 4Q final GDP arrived at 0.1%, as expected, versus +0.9% preliminarily. Still, the release doesn’t matter much for traders now as the data relates to pre-virus conditions in the economy, and market focus is now on the coronavirus- and oil-related developments. After peaking marginally below the 1.15 handle on Monday, EURUSD has been retreating today, mainly amid a broad-based recovery in USD demand. The pair dipped below 1.14 but still holding above the 1.1330 area, where the daily lows lie.
Meanwhile, Brent crude failed to make a clear break above the $37 handle earlier in the day and holds below this level ahead of the US trading. The upside potential remains limited at this stage, with bearish risks persisting as traders have been digesting Russia’s exit from the OPEC+ deal and the measures announced by Saudi Arabia. In the short term, Brent will likely remain below the $40 handle, but hopes for aggressive supportive and stimulus measures from the governments and central banks may support prices and prevent the futures from another plunge.
As for digital assets, bitcoin suffered decent losses over the last few days as well. BTCUSD dipped to the $7,600 area on Sunday and turned slightly positive today. Still, the leading cryptocurrency by market capitalization remains below the $8,000 handle which is the key level to watch for bulls at this stage. Should the prices fail to get back above this level any time soon, the downside pressure could reemerge.
