News & Analysis

Overnight on Wall Street: Thursday 05/03/2020

March 5, 2020

By Deepta Bolaky
 @DeeptaGOMarkets

Equity Markets

The G7 Mandate reassured investors that the G7 Finance Ministers and Central Bank Governors stand ready to use all appropriate policy tools including fiscal measures to support the economy against the economic challenge posed by the COVID-19:

Washington – “We, G7 Finance Ministers and Central Bank Governors, are closely monitoring the spread of the coronavirus disease 2019 (COVID-19) and its impact on markets and economic conditions.

Given the potential impacts of COVID-19 on global growth, we reaffirm our commitment to use all appropriate policy tools to achieve strong, sustainable growth and safeguard against downside risks.  Alongside strengthening efforts to expand health services, G7 finance ministers are ready to take actions, including fiscal measures where appropriate, to aid in the response to the virus and support the economy during this phase.  G7 central banks will continue to fulfill their mandates, thus supporting price stability and economic growth while maintaining the resilience of the financial system.

We welcome that the International Monetary Fund, the World Bank, and other international financial institutions stand ready to help member countries address the human tragedy and economic challenge posed by COVID-19 through the use of their available instruments to the fullest extent possible.

G7 Finance Ministers and Central Bank Governors stand ready to cooperate further on timely and effective measures.”

The coordinated move by the G7 countries and Joe Biden’s historic comeback appeased investors and helped Wall Street to rebound:

  • Dow Jones Average Industrial rose by 1,173 points to 25,917.
  • S&P500 added 4.22% or 126 points at 3,130.
  • Nasdaq Composite 334 points higher at 9,018.

Source: Bloomberg Terminal

Currency Markets

In the FX space, traders stayed mostly focus on the intervention of major central banks. The Bank of Canada joined the Fed and the RBA in easing monetary policies. The central banker slashed its interest rates by 50 bps on Wednesday.

Major currencies were mixed against the US dollar. Safe-haven currencies like the Swiss franc and Japanese Yen retreated as risk sentiment has improved while the Antipodeans emerged as the best performers against the greenback.

US Dollar Index

The US dollar index snapped out of four consecutive days of losses. The upbeat ISM Non-Manufacturing PMI and ADP Employment Change and a weaker Euro helped the index to remain in the 97 levels.

US Dollar Index (Daily Chart)


Source: GO MT4

AUDUSD

The AUSUSD continues to recover from recent lows. At the moment, a bigger rate cut from the Fed, the coordinated move by G7 countries and upbeat GDP reports showing a gentle turning point in 2019 Q4 before the virus risks are providing some support to the pair.

However, the bid momentum is fragile given the poor fundamentals. Attention will be on the trade balance to be released this morning.

Oil & Gold

The oil market was unable to fully benefit from the risk-on sentiment and better-than-expected EIA oil report as the OPEC+ ministerial panel ended without an agreement. As of writing, WTI and Brent Crude remained in the vicinity of $46 and $51 respectively.

UKOUSD and USOUSD (Hourly Chart)


Source: GO MT4

Gold seesawed between small gains and losses and has consolidated in a tight range around the $1,640 level.

XAUUSD (Hourly Chart)


Source: Bloomberg Terminal 

Key Upcoming Events

Imports, Exports, and Trade Balance (Australia)
BoJ’s Suzuki Speech (Japan)
OPEC Meeting, Jobless Claims, Unit Labour Costs, and Factory Orders (US)

Friday 06 March 2020
Indicative Index Dividends
Dividends are in Points
ASX200WS30US500US2000NDX100CAC40STOXX50
0.7700.0940.103000
ESP35ITA40FTSE100DAX30HK50JP225INDIA50
00006.82300


Disclaimer: Articles and videos from GO Markets analysts are based on their independen
t analysis. Views expressed are of their own and of a ‘general’ nature. Advice (if any) are not based on the reader’s personal objectives, financial situation or needs.  Readers should, therefore, consider how appropriate the advice (if any) is to their objectives, financial situation and needs, before acting on the advice.

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