Asian stocks plunged on Tuesday amid corporate outlook downgrades and fears that the coronavirus outbreak will drive the global economy in deep recession, as the costs of the coronavirus outbreak are only now becoming visible and we have probably not seen the worst yet. U.S., Spain and the U.K. reported new fatality highs, while in Italy the curve has flattened, as it reported a drop in death numbers for the second day.
China provides some signs of improvement as the Caixin Manufacturing PMI came in at 50.1, topping the expectations of 46 in March. Yesterday the Chinese manufacturing PMI showed a V-shaped rebound, from the record low of 35.7 to 52 in March. The quick recovery in manufacturing provides a promising sign that the U.S. might bounce back as quickly even I don’t believe that is the case for Europe.
Nikkei 225 ended 4.50% lower at 18065; the Singapore Straits Times closed down 1.98% lower at 2433. The Hang Seng Index is 2.43% lower at 23030, and the Shanghai Composite ended 0.57% lower at 2734. ASX 200 managed to rebound and closed up 3.6% higher at 5258.
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Nikkei 225 Slumps After Manufacturing PMI Disappoints
Nikkei 225 ended 4.50% lower at 18065, after the Japan Jibun Bank Manufacturing PMI registered in at 44.2, below the forecasts of 44.8 in March. Sentiment among Japan’s large manufacturers fell in the January-March period, marking the fifth straight quarter of decline. The Tankan Large Manufacturing Index registered in at -8 topping the expectations of -10 in the first quarter, while the Large Manufacturing Outlook came in at -11, also above the expectations of -14 in 1Q.
On the technical side, the Nikkei 225 dropped for the second consecutive day halting the rebound from recent lows. On the downside, immediate support stands at 17,871 today’s low, if the Nikkei index breaks below, the next support zone will be met at 17,231 the low from March 24th trading session.
On the flip side, resistance for Nikkei 225 will be met at 18,784 the daily top. The next resistance stands at 19323 the high from March 31st session. If the index moves higher, the next supply zone is at 19560 the high from March 25th.