News & Analysis

Overnight on Wall Street: Thursday 26 March 2020

March 26, 2020

By Deepta Bolaky
 @DeeptaGOMarkets

Equity Markets

Risk sentiment is being driven by hopes that central bankers and governments will rescue the markets as long as needed. Investors are currently anticipating the bill approving one of the biggest stimulus packages in the US. Global equities were mostly in positive territory yesterday with its first back-to-back gains in more than a month. However, the risk sentiment will remain dependent on the number of new virus cases and the pace of growth.

We are facing an economic crisis triggered by an unprecedented health crisis.

The focus will, therefore, remain on how fast the virus is being spread and the measures being undertaken to contain the virus. Monetary and fiscal interventions measures currently being deployed are in response to the aid the global economy needs at the moment. If countries failed to contain the virus in the timeframe forecasted, the global economy will require more stimulus.

It is not yet a sign of a lasting rebound. Extreme Volatility will likely continue to prevail!

Major US equity benchmarks ended mixed as sentiment remains fragile despite several rescue packages :

  • Dow Jones Average Industrial added 496 points or 2.4% to 21,201.
  • S&P500 rose by 28 points or 1.2% at 2,475.
  • Nasdaq Composite ended 33.6 points or 0.5% lower at 7,384.

Currency Markets

In the FX market, major currencies were stronger against the US dollar. Risk appetite in the financial markets has tamed the haven flows of the greenback.


Source: Bloomberg Terminal

The Canadian dollar was among the best performers as a recovery in oil prices and a weaker US dollar dragged the USDCAD pair by almost 300 pips from 1.44  to 1.41 level.

The Aussie dollar traded relatively flat amid a lack of fresh catalyst and an empty economic calendar. The AUSUSD is trading in a relatively small range below the 0.6000 level awaiting for a fresh trading impulse as Australia is also struggling to impose more stringent measures to contain the virus.

Oil 

The recent stability in crude oil prices is mostly driven by emergency stimulus packages. However, the narrative for the oil market has not changed much. Prices continue to remain under extreme pressure dragged by a simultaneous demand and supply shock.

On the geopolitical front, we note that the Trump administration is pushing for Saudi Arabia to tame down its plan to flood the oil market. It is also reported that the US and Saudi Arabia may be setting up an oil accord. As of writing, Brent Crude and WTI are trading sideways around $27 and $23 levels.

Precious Metals

Overall, the sentiment around precious metals is quite positive. Gold traded back to the top of the range seen at the beginning of the year. The liquidity crisis remains the focal point for the precious metal. Traders are monitoring the giant US aid package and the pandemic will for next trading impulse.

Gold was weaker on Wednesday but is consolidating around a key psychological level at $1,600.


Source: Bloomberg Terminal

Key Upcoming Events

Gfk Consumer Confidence Survey (Germany)
Economic Bulletin (Eurozone)
Retail Sales, BoE MPC Vote, Asset Purchase Facility, Monetary Policy Summary, Interest Rate Decision and Minutes (UK)
GDP, Jobless Claims, and GDP (US)

Friday, 27th March 2020
Indicative Index Dividends
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Disclaimer: Articles and videos from GO Markets analysts are based on their independent 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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