US stock futures drop 1% on Coronavirus scare

Risk-off is in full swing in Asia with the S&P 500 futures reporting a 1% drop.
Oil prices and other major equity markets are also flashing red.
Coronavirus fears have intensified and the resulting flight to safety is boding well for anti-risk assets.

Omkar Godbole FXStreet Contributor

US stock futures and crude oil are flashing red in Asia, while the anti-risk assets are better bid on fears China is struggling to tame coronavirus.

The futures on the S&P 500 are currently down 1 percent at 3,259 and oil benchmarks - WTI and Brent - are shedding 2.4 percent.

Stocks in Asia are also flashing red with Japan's Nikkei reporting a 440 point or 1.87% drop and China A50 futures shedding more than 3%. European stocks are expected to open on a negative note, as futures on the Euro Stoxx 50 index are trading with a 0.90% loss at press time.

Meanwhile, the Japanese yen, a safe haven, is pushing higher against most majors. The currency gapped higher against the US dollar in early Asia. Gold, also a safe haven is also gaining ground, now trading at $1,583 per Oz, representing a 0.70% gain on the day.

Coronavirus scare

China announced an unspecified extension to the weeklong lunar new year holiday, exacerbating worries the coronavirus outbreak could severely disrupt the Chinese economy.

As per Bloomberg, the death toll from the virus has risen to at least 80, and confirmed cases in the US rose to five on Sunday.

Possible adding to the risk-off tone are media reports stating the US Embassy in Iraq's capital Baghdad was hit by 3 rockets in the early hours of Monday. The risk-off mood will likely worsen, sending stocks deeper into the negative territory and oil prices higher, if tensions in the middle east escalate.

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

GBP/USD alternates gains with losses near 1.3550

GBP/USD struggles to maintain the recent bull run and hovers around the 1.3550 zone on Tuesday. Cable’s irresolute price action follows the equally directionless performance of the Greenback, while the disheartening UK jobs data also seem to limit the upside.

EUR/USD climbs to daily highs past 1.1580

EUR/USD keeps the current bullish tone well in place and approaches the 1.1600 region on turnaround Tuesday. Indeed, the pair advances for the fourth day in a row amid the lack of direction in the US Dollar, steady uncertainty in the geopolitical landscape and diminishing bets for further Fed rate hikes.

Gold challenges $4,400 amid modest losses

Gold faces some fresh selling pressure and retreats modestly to the area below the $4,400 mark per troy ounce after two consecutive daily advances. The precious metal’s correction comes in tandem with the absence of direction in the US Dollar, declining US Treasury yields across the curve and continuous uncertainty in the Middle East crisis.

Crypto Today: Bitcoin, Ethereum, XRP falter amid escalating US-Iran tensions

Cryptocurrency prices are broadly correcting on Tuesday, with Bitcoin edging lower toward $64,000. Ethereum shows weakness amid ongoing narrow-range consolidation, while Ripple trades below $1.00, weighed down by falling technical indicators.

Fiscal concerns and doubts on Fed independence send US yields to long-term highs

US Treasury yields keep rising across the curve this week, with the yield for the 30-year Treasury bond reaching its highest level since 2007, during the global financial crisis, at 5.33% so far on Monday. A mix of concerns about the ballooning US fiscal deficit and growing doubts about the Federal Reserve’s Independence are increasing pressure on US Government Bonds.

Why is Crude Oil priced for a reopening the ships haven't made?

Fourteen vessels crossed the Strait of Hormuz on Tuesday. Before the war, the count ran near 120 a day. In the sessions since the waterway was publicly declared open, Brent has drifted back to $87 and West Texas Intermediate (WTI) to $81, both a little lower again on Wednesday, with daily momentum on each unwound from the top of its range in late July to the low twenties now.