Daily summary: Covid-19 fears spark sell-off in global stocks

• Trade tensions between the US and Europe began to mount
• IMF predicts deeper global recession due to the pandemic
• Number of new Covid-19 cases continue to rise across the globe

European indices extended yesterday losses, after news that Trump administration might implement new exports tariffs worth $3.1 billion on goods from the UK, France, Spain and Germany, such as  olives, beer, gin and trucks. President Trump is also considering higher duties on products including aircrafts, cheese and yogurt. Rising number of coronavirus cases in the US, Latin America, Middle East and Germany also weighed on markets moods. On the corporate side, Wirecard (WDI.DE) shares plunged after former CEO Markus Braun was arrested yesterday and released on EUR 5 million bail. DAX 30 dropped almost 4%, CAC 40  declined 2.6 % and FTSE 100 finished 2.82 % lower.

US indices are trading under pressure amid increasing concerns about a second wave of coronavirus infections. Yesterday  36 000 new cases has been reported in the US, it is the highest number since the beginning of May. Several states including Texas, Florida, Arizona and California saw a new record high number of infections. Washington state made face masks mandatory in public places. Governors of New York, New Jersey and Connecticut announced that visitors from states with high coronavirus infection rates must self-quarantine for 14 days on arrival. Meantime the EU is considering implementing a travel ban on American citizens due to the recent surge of the coronavirus cases. White House health adviser Anthony Fauci has said the next two weeks could be critical in containing the outbreak. Currently over 2,43 million people are infected in the US. Dow Jones fell 2.68 % S&P 500 is down 2.57 % and the Nasdaq is trading2.27 % lower.

According to the International Monetary Fund, the closure of economies and consumer uncertainty will lead to a deeper decline in GDP than expected in April. It is currently estimated that the decline in global GDP this year will reach 4.9% (3% was expected in April). The rebound in 2021 is expected to reach 5.4%, although 5.9% was previously expected. The largest, almost double digits, declines are to be recorded in Latin America. Analysts now expect that U.S. output will shrink 8.0%, more than 2 % points worse than the April forecast.

Oil prices plunged over 3% on Wednesday, with WTI crude below $38 a barrel and Brent crude near $40.20 a barrel after recent EIA report showed that US crude inventories rose by a much bigger-than-expected 1.442 million barrels in the latest week. Earlier in the session, oil prices were already falling due to further oversupply and demand concerns. Crude oil is retreating due to the possibility of a deeper economic slowdown. On the other hand, gold reached new 8-year highs at USD 1780 per ounce, which shows that investors are hedging against lurking risks.

Fitch downgraded Canada's rating to AA+ from AAA with a stable outlook, saying that  the downgrade reflects the deterioration of public finances resulting from the pandemic. Fitch believes that Canada will run much higher deficits and will emerge from the pandemic with higher debt ratios, including gross government general debt of 115.1% to GDP.

Some noteworthy data reports will be released today. German  GfK Consumer Climate and ECB Monetary Policy Meeting Accounts will be the key release of the European session while US jobless claims, GDP figures and durable goods orders will be on watch during US trading hours.

AUDUSD  - Aussie is trading under pressure as investors rush for safe-haven currencies amid concerns over a second wave of the coronavirus infections. Currency pair is approaching local support at 0.6858. If sellers will manage to break below, then support at 0.68 may be at risk. Source: xStation5