Another trading week began on a downbeat tone in the global financial markets, with Australian stocks leading the losses in Asia – the S&P/ASX 200 was down nearly 10% by the close. Equities were hit hard amid the lingering concerns over the coronavirus outbreak along with a series of dismal economic data out of China. The unemployment rate hit 6.2% last month, the highest on record. Fixed asset investment declined 24.5% in January-February, industrial output declined 13.5% while retail sales tumbled 20.5% in the first two months of the year.
Against this backdrop, markets failed to capitalize on the measures taken by major central banks including the Federal Reserve that cut its key rates by 100 basis points to the 0.0%-0.25% range and launched a massive quantitative easing program to shield the domestic economy from a recession amid a spreading coronavirus.
In Europe, stocks plunged at the open amid the shutdown taking place on the continent. Spain has imposed a 15-day nationwide lockdown and confirmed the highest number of virus cases in the region, after Italy. France and Germany have closed large parts of their economies, stepping up their efforts to contain the spread of the disease. Italy’s FTSE MIB is losing nearly 8% on Monday, with Germany’s DAX 30 declining over 7.5% as well.
Meanwhile, the greenback turned negative against the majors after the strongest week since 2015. EURUSD got back above the key moving averages after a plunge to lows around 1.1050 late last week. Despite the bounce, the recovery lacks the upside momentum, with the picture looking mixed at this stage. The common currency needs to confirm a break above 1.12 on a daily closing basis so that to extend the recovery in the near term.
As for cryptocurrencies, bitcoin remains under the selling pressure, having registered four-day lows around $4,700 on Monday. On Friday, the largest digital currency by market capitalization briefly plunged below the $4,000 psychological level, and it looks like it’s still too early to call a bottom now, as the bearish pressure prevails and the recovery attempts look unconvincing.