Market Brief: Nikkei 225 in the Red as WHO Calls for an Emergency Meeting on the Coronavirus

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Written By: Angeline Feliciano
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    Summary:
  • The Nikkei 225, Hang Seng Index, and risk currencies were once again weighed down by the coronavirus. Meanwhile, the JPY outperforms.

Asian Equities Down as Fears of the Coronavirus Mount

The Nikkei 225 gave up all its gains from yesterday’s trading as it closed over 400 points or 1.72% lower today at 22,977.8. Meanwhile, the Hang Seng Index is in the red by over 600 points, down by over 2% at 26,523.1.

Concerns about the coronavirus has once again weighed down Asian equities markets. As of this writing, there are a total of 7,783 confirmed cases of the coronavirus around the world. The death toll has also risen to 170, with all of them in China. The World Health Organization (WHO) has already called for a meeting for its Emergency Committee. As we have seen with the SARS outbreak of 2003, markets react negatively to emergency meetings from WHO because it fuels concerns among investors. A declaration of a pandemic would also weigh down stocks even further.

AUD and NZD Down, JPY Outperforms

Risk currencies such as the Aussie and Kiwi also fell victim to market sentiment. AUDUSD is around 10 pips lower from its opening price despite a positive report from Australia. Import prices for Q4 2019 printed higher at 0.7% than the 0.4% forecast. Meanwhile, NZDUSD is down by 19 pips, trading at 0.6506.

On the other hand, the Japanese yen is performing well amid the markets risk-off mode. USDJPY slid to 108.83 earlier today after opening at 108.99. EURJPY is also down by around 10 pips from its opening price with its technical setup hinting at a potential sell-off.

Read our Best Trading Ideas for 2020.

EURJPY Outlook

On the daily time frame, we can see that the recent sell-off pushed EURJPY below support at the rising trend line (from connecting the lows of September 4, October 3, and January 6). The currency pair is also trading below support at the 100 SMA.

A closer look at the 4-hour chart shows that EURJPY has been consolidating for the past few trading sessions. This succeeds a drastic drop on the currency pair which has effectively formed a bearish flag pattern. A bearish close below the range at 119.80 could mean that there is more downside ahead of EURJPY. It could fall to support at around 117.09 where it bottomed on October 7.

On the other hand, a bullish close above yesterday’s high at 120.41 may signal that buyers have taken over. A rally on EURJPY could ensue all the way to 121.50 where the 100 SMA and 200 SMA coincide.

Written By: Angeline Feliciano

Angeline Feliciano has been trading Forex for over ten years. She has invaluable experience working in FX education companies like BabyPips.com and Learn to Trade as a trader, currency analyst, trading coach, and presenter. Aside from these roles, she has also created intensive educational content on fundamental analysis which is heavily sought after by retail traders. She has taught hundreds of people how to trade the FX market in the Philippines and in Australia. When she is not trading, you can find her in the gym lifting weights.

Published by
Written By: Angeline Feliciano