Wall Street indexes bounced by nearly 6% overnight in a volatile session after Trump administration proposed a $1 trillion stimulus package to support the domestic economy amid the coronavirus outbreak. Of note, West Virginia reported its first positive virus case, so now all 50 states have confirmed cases. As a result, the death toll across the country passed the 100 mark. After a short-lived recovery, the US stock index futures are down about 3% early on Wednesday.
Meanwhile, Asian stock markets saw another negative session today, with Australian stocks continuing to show the highest volatility. The fact that the shares fell despite massive stimulus measures in many countries shows that investors are focused on the coronavirus developments and don’t believe that the measures taken will help to prevent a recession. European equities opened lower as well, with German DAX 30 leading the losses, plunging by 4%.
After a rally witnessed on Tuesday, the greenback remains resilient despite a mild correction witnessed during the Asian hours. The dollar derives some support from a rise in the US 10-year Treasury yields to 1.19%. as such, USDJPY is back around the 20-DMA after a brief dip below 107.00. EURUSD continues to struggle below 1.10 and may refresh March lows under 1.0950 should USD bulls stay in the game in the short term. Later today, US construction numbers are to be revealed, and should the figures disappoint, the euro could regain some ground but the downside bias will likely persist anyway.
In other markets, Brent crude extended losses to $28, continuing to move downwards amid a combination of strongly bearish drivers. The coronavirus outbreak coupled with stronger dollar and OPEC’s inaction add to the selling pressure in the market and will likely continue to push the barrel lower until the situation starts to improve, or the OPEC+ group resumes the negotiations and takes emergency measures to stem the free-fall. Once below, $28, Brent could target the $27 figure, last seen more than four years ago. On the upside, the important barrier now arrives at the $30 psychological level.