Asia Morning: US Stocks Lower On Health Official’s Warning

On Tuesday U.S. stocks gave up early gains to close in negative territory, as market sentiment was dampened by a top health official’s warning on reopening the economy. .

In a remote testimony to Congress, Anthony Fauci, the director of the National Institute of Allergy and Infectious Diseases, said that the coronavirus was not yet under control, adding: “There is a real risk that you will trigger an outbreak that you may not be able to control and (…) could even set you back on the road to try to get economic recovery.”

The Dow Jones Industrial Average dropped 457 points (-1.9%) to 23,764, the S&P 500 fell 60 points (-2.1%) to 2,870, and the Nasdaq 100 lost 186 points (-2.0%) to 9,112.

Real Estate (-4.25%), Banks (-3.51%) and Consumer Durables & Apparel (-3.22%) sectors lost the most.

Coty (COTY -9.4%), Albemarle (ALB -8.0%), Morgan Stanley (MS -3.5%), BlackRock (BLK -7.8%) and Cummins (CMI -5.1%) showed marked losses.

On the technical side, about 29.9% (29.8% in the prior session) of stocks in the S&P 500 Index were trading above their 200-day moving average, and 64.9% (74.9% in the prior session) were above their 20-day moving average.

Regarding U.S. economic data, Consumer Price Index declined 0.8% on month in April (as expected), the biggest decrease since 2008. The U.S. government recorded a monthly budget deficit of 737.9 billion dollars in April (737.0 billion dollars expected).

And the National Federation of Independent Business’s Small Business Optimism Index fell to 90.9 in April (84.0 expected).

Later today, April Producer Price Index (-0.5% on month expected) will be reported.

European stocks were mixed, with the Stoxx Europe 600 Index adding 0.3%. Germany’s DAX was little changed, France’s CAC fell 0.4%, while the U.K.’s FTSE 100 rose 0.9%.

U.S. Treasury prices rebounded pressing the benchmark 10-year Treasury yield to 0.679% from 0.724% Monday.

Spot gold price gained 6 dollars to $1,701 an ounce.

Saudi Arabia announced plans to cut oil production in June by an extra 1 million barrels a day to 7.5 million, the lowest level since 2002. Meanwhile, the U.S. Energy Information Administration lowered its 2020 domestic oil production forecast to an average 11.7 million barrels per day, down 500,000 barrels a day from 2019. U.S. WTI crude oil futures (June) jumped 6.8% to $25.78 a barrel.

On the forex front, the ICE U.S. Dollar Index fell 0.2% on day to 100.00. U.S. President Donald Trump tweeted: “As long as other countries are receiving the benefits of Negative Rates, the USA should also accept the ‘GIFT’.”