Is the global stock downturn a replay of the Lehman Shock!? “Key points on February 26 and event schedule”
Following yesterday's Dow Jones Industrial Average drop of about 1,000 points, today also saw a record drop of about 880 points for two consecutive days.
Stock prices around the world, including Europe, Asia, and Oceania, are falling.
The situation is worsening more than initially anticipated.
In some places there is talk that underestimating the subprime loan problem led to a Lehman-like shock, similar to what happened then.
We are watching how far the chain of global stock declines will continue today as well.
◎ Notable points for today
1) Global stock declines
Following yesterday, U.S. stocks fell for the second day in a row.
Europe and Asia also declined, and global stock declines continue.
Easing money withdrawn from stocks is flowing into the bond market.
With U.S. yields declining, dollar selling is progressing, but funds pulled from European, Oceania, and Asian stocks may flow into bonds as well.
If that happens, funds could flow into higher-yielding U.S. bonds, potentially causing dollar buying.
Therefore, the dollar is expected to hold firm.
Additionally, there is a possibility that the franc will be bought as a safe-haven currency, but SNB (Swiss National Bank) intervention to sell francs is a concern.
Next, the position of the yen is in focus.
With global stock declines, Japan's stocks are naturally sold as well.
In this situation, will there be Japanese selling of stocks and yen, or will it become a safe-haven for stocks and the yen? Attention is on this.
Yesterday the U.S. dollar was sold, so the yen and euro, which have large USD-denominated trading, were bought; it is also important to see whether the yen and euro will be bought or sold when U.S. dollar selling subsides.
Today, too, focus on stock prices and the Japanese yen, euro, and U.S. dollar.
2) European leaders' statements
Today we have statements from European leaders, including ECB President Lagarde.
There are concerns about the spread of COVID-19 in Europe, including Italy, and restrictions on the movement of people and goods are appearing.
In addition, the impact from China is large, and European economic stagnation is a concern.
In this situation, attention is on what the ECB will do next, or whether it will keep its current stance and wait through the year. What kind of statements will be made about monetary policy and the economic outlook?
◎ Today's events schedule
Wednesday, February 26
17:00 EUR Holtzmann — President of the Austrian Central Bank speaks
17:00 EUR Panetta — ECB Executive Board member speaks
20:00 EUR Mackluff — President of the Central Bank of Ireland speaks
22:30 EUR Lagarde — ECB President speaks
23:35 USD Kaplan — President of the Dallas Fed speaks (2020 voting member)
Thursday, February 27
00:00 USD U.S. new home sales
00:30 USD Crude oil inventories
03:00 USD U.S. 5-year note auction
06:45 NZD New Zealand trade balance
09:00 NZD NBNZ Business Confidence
