News & Analysis

Overnight on Wall Street: Tuesday 03/03/2020

March 3, 2020

By Deepta Bolaky

Equity Markets

US benchmarks dramatically went into correction territory last week as the wider spread of the coronavirus created panic across the board. Money flows into the bond markets and US Treasuries yields dropped to record lows.

Monday saw an impressive turnaround in the US markets compared to Asian and European markets. The rebound was mostly driven by expectations that central banks will come to the rescue with rate cuts.

Even though rate cuts alone will probably not fix the fundamental issues, investors are looking for signs that central banks will take action now ahead of the second quarter. It is a wait-and-see mode to see if central bankers will give up to the ramping pressure for rate cuts.

Major US equity benchmarks traded mixed as the uncertainties around the virus are weighing on an already fragile global economy.

  • Dow Jones Average Industrial rose bu 1,294 points to 26,703.
  • S&P500 added 4.6% or 136 points at 3,090.
  • Nasdaq Composite only 385 points higher at 8,952.

Currency Markets

In the FX space, the attention was on central banks. It was reported that G7 finance chiefs will be holding a conference call on Tuesday to discuss measures to deal with the virus outbreak and its economic impact.

The US dollar was mostly weaker against major currencies as bets of Fed rate cuts weighed on its haven status. The Euro was among the best performers while the Pound emerged as the worst-performing G10 currencies.

Source: Bloomberg Terminal

The weakness in the US dollar helped other commodities related currencies to edge higher. Attention turns to Australia as the RBA will hold its interest rate decision on Tuesday which will act as a benchmark in determining what to expect from other major central banks.

Oil & Gold

Oil rebounded from recent lows as Russia shows a willingness to cooperate with OPEC+ members to support falling oil prices. As of writing, WTI and Brent Crude are trading in the vicinity of $47 and $52 respectively.

UKOUSD and USOUSD (Hourly Chart)

Source: GO MT4

Gold traded flat on Monday just below the psychological level of $1,600. Rate cut expectations have sparked an impressive rebound of around 4% on Wall Street, but risk sentiment remains fragile.

The XAUUSD pair erased the haven rush gains made due to the panic around the coronavirus but remained in the elevated levels seen in January because investors see the virus as another layer of uncertainty denting slowing global growth.

XAUUSD (Hourly Chart)

 Source: Bloomberg Terminal

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New Homes Sales, Building Permits, RBA Interest Rate Decision, Rate Statement and AiG Performance of Construction Index (Australia)
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Consumer Prices Index, and Unemployment Rate (Eurozone)
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Wednesday 04 March 2020
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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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