Recession Fears Weigh on Global Financial Stocks 

Nikolas Papas

Nikolas has been involved in the finance industry for over fifteen years spanning across Europe and USA with a depth of knowledge and experience within many aspects of the financial markets. Nikolas gained several years experience with some of the Europe’s leading Brokers, as equity analyst, and trader managing accounts for both Private and Corporate Investors. He enjoys both the fundamental and technical aspects of trading focusing on stock markets and all FX majors. Currently Nikolas provides analysis and comments to online financial publications. Educational background in Economics (BSc), and Finance (MSc).

Recession Fears

Recession Fears Weigh on Stocks 

March 6, 2020
Recession Fears
Recession fears weigh on stocks

Asian indices tumbled on Friday as renewed coronavirus and recession fears drive investors away from risky assets. Global cases have reached 100,000 while the death toll is at 3.383.

The Fed and Bank of Canada responded this week to the economic threats by reducing interest rates by 50 basis points. Asian Development Bank estimates that the coronavirus can have a -0.1% to -0.4% impact on global growth while the Chinese GDP might be 0.3% lower.

European Commission yesterday, warned that France and Italy are at risk of slipping into recession, while the IMF said it sees “direr” possibilities ahead for the global economy. U.S. lawmakers agreed on a $7.8 billion spending package to respond to the coronavirus outbreak.

Nikkei 225 finished 2.72% lower at 20,749. The Shanghai Composite index closed 1.05% lower at 3039. The Singapore FTSE Straits Times ended 1.54% lower at 2971. Hang Seng in Hong Kong was 2.19% lower at 26182. The ASX 200 index finished 2.81%  lower at 6216. 

Another tough day started in European trading with stocks down over 1.5%. The German DAX is 1.58% lower at 11,758. CAC40 index is 1.55% lower at 5,279, while the FTSE MIB in Milan is 1.90% lower at 21,145. In London, the FTSE 100 is 1.33% lower at 6,614.  

gold
XAUUSD Hourly (H1) Chart

In the commodities markets, the crude oil price continues lower and is 0.75% lower at $45.55 while the Brent oil is 0.59% lower at $49.67 per barrel. The gold price is almost unchanged after yesterday’s rally, at 1671. The gold price is bullish, and the first resistance will be met at $1,689 the recent high, while the support stands at $1,584 the recent low. Silver price is 0.65% lower at $17.28.    

The cryptocurrencies started higher in the Asian session. Bitcoin (BTCUSD) is 0.57% higher at $9,118 hitting the daily low at $8,983 and the daily high at $9,123. Bitcoin’s technical outlook is bullish now as the cryptocurrency broke above the 50-day moving average while today is testing the 200-day moving average. First support for BTCUSD stands now at $8,400 the low from February 28, trading session. On the flip side, the first resistance seen at 9,123 the daily high and then at 10,495 the yearly top.

Ethereum (ETHUSD) trades 2.83% higher at 235.29 with capitalization at 25.87 billion. The initial resistance for ETHUSD stands at $274.18, the February top while the first support stands at $213.47 the February low. Ripple (XRPUSD) is 1.08 higher at 0.2419. Litecoin (LTCUSD) is 0.59% higher at 62.50. The crypto market capitalization stands now at $261.48 billion.

In the Lookout: In Japan the Leading Economic Index came in at 90.3, below the forecasts of 91.9 in January, while the Japan Coincident Index came in at 94.7, topping the estimates of 94.2. 

Australia Retail Sales s.a. came in at -0.3%, below the forecasts of 0% in January.

The People’s Bank of China has set the Yuan (USDCNY) reference rate at 6.9337 versus yesterday’s fix at 6.9403. 

Trading Perspective: In the foreign exchange markets, the Aussie dollar is 0.12 higher at 0.6621 against the U.S. Dollar. The U.S. dollar index is 0.08% lower at 96.51. NZDUSD trades 0.72% higher at 0.6347.

recession
EURUSD Daily Chart

EURUSD At Eight-Month Highs  

EURUSD makes eight-month highs amid USD weakness across the board. Coronavirus spread in the U.S. weighs on the dollar after the Fed cut interest rates by 50 basis points to 1% – 1.25% in a move to offset the virus impact on the economy. Earlier today the Germany Factory Orders for January came in at 5.5% above the forecasts of 1.4%, the previous reading was at 6.6%. The yearly reading came in at -1.4% also above the expectations of -7.6%. Traders now await the monetary policy decision by the ECB on March 12. 

On the technical side, EURUSD is 0.01% higher at 1.1235 as the bullish momentum that started from February 21 is still intact. On the upside, the immediate resistance for the EURUSD stands at 1.1248 the daily top. A break above might target the next resistance level at 1.1278 the high from July 19, 2019. 

On the other hand, the initial support stands at 1.1211 the daily low. If the pair breaks below the next target would be at 1.1119 the low from March 5, while more bids might emerge at 1.1098 the 200-day moving average. 

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