Asian equities kicked off the week on a mixed note. China and Japan were closed for holiday, the ASX 200 gained 1.13%, while stocks in Hong Kong
lost around 4% on worries that Donald Trump could impose new tariffs on Chinese exports.
While investors are already bombarded with weak
economic data and bad corporate results as a result of a strict global economic lockdown due to the coronavirus crisis, throwing renewed
trade tensions will only serve to further dash investors’ hopes of a healthy global recovery once the crisis is over.
Donald Trump who had a
terrible hit from the stock markets in the run up to this year’s presidential election should find the right balance between blaming China
for the virus to convince the crowds to vote for him, and providing a solid basis for the economy to heal.
Meanwhile the factory output in Asia
tumbled as a result of halted activity, the PMI data in Europe should confirm the worst contraction on record in April this morning, while the
US factory orders due later today are expected to have slumped 9.2%.
On Friday, the US jobs report is expected to reveal an
unprecedented plunge in payrolls. The nonfarm payrolls are expected to have fallen by 21 million. The anxiety over the US jobs figures
should weigh on the investor mood throughout the week and limit purchases in risk assets.
Hence, investors could quickly forget the
generosity of fiscal and monetary packages to throw a floor under the equity sell-off.
With rising tail risks and dashed investor
appetite, the US and European equities are poised to open in the negative. FTSE futures slid 0.63%, while DAX futures are down 3.42%.
The
S&P500 will likely continue giving back gains toward the 50-day moving average, 2745.
In the currencies market, the demand for
safety rises on the mix of coronavirus-hit economic data and renewed US-China trade tensions. The US dollar is better bid in Asia, the yen and
Swiss franc are stronger, while gold remains bid below the $1700 per oz.
By Ipek Ozkardeskaya
