News & Analysis

Overnight on Wall Street: Wednesday 04/03/2020

March 4, 2020

By Deepta Bolaky

Equity Markets

Markets participants were taken aback by the Fed’s first emergency rate cut since the 2008 financial crisis. In a surprising move, the Fed slashed interest rates by a half percentage point to 1% – 1.25%.

Even though expectations of rate cuts initially sparked a rebound in the US sharemarket, investors were not reassured that the 50 basis point rate cut will be enough as the emergency cut brought more panic on the magnitude of the coronavirus impact on the economy.

  • Dow Jones Average Industrial rose by 786 points to 25,917.
  • S&P500 added 2.8% or 86 points at 3,003.
  • Nasdaq Composite 268 points higher at 8,684.

Source: Bloomberg Terminal

Currency Markets

In the FX space, the attention remained on the expected intervention of major central banks. Market participants also monitored any developments following speculations of a coordinated move by G7 countries to shore the global economy from the impact of the virus risks.

Nearly all G10 currencies were stronger than the US dollar as the emergency rate cut dampened the haven status of the greenback.

Source: Bloomberg Terminal

The Japanese Yen was the best performing G10 currencies as investors sought safety with haven assets.

The Australian dollar rose on the RBA rate cut and rallied further in the US session after the Fed delivered a much bigger rate cut.

The Canadian dollar struggled to benefit from the weakness in the greenback as commodities fell and traders are expecting the Bank of Canada to follow its peers in easing monetary policies.

Oil & Gold

The risk-off sentiment sent oil prices to the downside again despite Russia recent willingness to cooperate with OPEC+ members to support falling oil prices. As of writing, WTI and Brent Crude are trading in the vicinity of $46 and $51 respectively.

UKOUSD and USOUSD (Hourly Chart)

Source: GO MT4

Gold bolstered higher above the $1,600 mark as investors flew to safety. The XAUUSD pair remained within the elevated levels seen last week. The next leap will depend on other central banks’ intervention. Another wave of monetary policies due to the evolving risks around the coronavirus might not reassure investors if some sort of fiscal commitments does not follow.

XAUUSD (Hourly Chart)

Source: Bloomberg Terminal

Key Upcoming Events

Gross Domestic Product (Australia)
Caixin Services PMI (China)
Retail Sales and Markit PMI Composite (Germany)
Consumer Price Index (Switzerland)
Markit PMI Composite, and Retail Sales (Eurozone)
Markit Services PMI (UK)
ADP Employment Change, Markit Services & Composite PMI, ISM Non-Manufacturing New Orders Index, PMI, Employment Index & Prices Paid and Fed’s Beige Book (US)
BoC Rate Statement, Interest Rate Decision, and Press Conference (Canada)

Thursday 05 March 2020
Indicative Index Dividends
Dividends are in Points

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.


Let's Get Started with GO Open a Live Account Try a Free Demo