News & Analysis

Overnight on Wall Street: Wednesday 18/03/2020

March 18, 2020

By Deepta Bolaky

Equity Markets

The ramping efforts by the Trump administration to seek around $1 trillion to tackle the economic impact from the coronavirus pandemic have brought some relief to a falling stock market. Given that the ongoing shutdowns of cities, states or countries are threatening the normal global activity and fuelling panic across the board, investors are scrutinising the intervention actions to stem the turmoil in the financial markets.

World Equity Indices (% Change)

Source: Blomberg Terminal

Investors are momentarily finding support from governments and central bankers bigger stimulus package to soothe markets. Wall Street recovered from Monday massive losses.

  • Dow Jones Average Industrial added 1,049 points or 5.20% to 21,237.
  • S&P500 rose by 143 points or 6.00% at 2,529.
  • Nasdaq Composite ended 430 points or 6.23% higher at 7,335.

 The rebound will be subject to the official details of the stimulus package and whether it meet investors’ expectations. 

Currency Markets

In the FX market, major currencies were weaker against the US dollar. The prospects of a big stimulus package have helped the US dollar to stand out against its peers.

Source: Bloomberg Terminal

The Australian dollar struggled to push higher and was among the worst performer despite the improvement in risk sentiment. The RBA minutes fell short of expectations and investors now await for the speech of the RBA’s Governor Philip Lowe on Thursday.

The AUDUSD pair dropped to multi-year low to 0.5960 before attempting to reclaim the 0.60 level.

Oil & Gold

The oil market remains under extreme pressure as a simultaneous demand and supply shock are keeping prices on the downside. A larger than expected draw in crude oil inventory failed to provide support to the oil markets. In a risk-off environment, the oil war is sapping investors’ demand for oil. As of writing, both Brent Crude and WTI are trading to $29 and $27 levels.

UKOUSD and USOUSD (Daily Chart)

Source: GO MT4

As investors hunt for liquidity, gold was mostly liquidated to meet margin calls or other liquidity requirements. A stronger US dollar also weighed on the XAUUSD pair. Gold prices rebound at the start of the week on the announcement of stimulus packages.

As of writing, the pair reclaimed the $1,500 level and is currently trading at $1,540.

XAUUSD (6-Month Chart)

Source: Bloomberg Terminal

Key Upcoming Events

RBA’s Ellis Speech and Westpac Leading Index (Australia)
Merchandise Trade Balance, Imports and Exports (Japan)
Consumer Price Index (Eurozone)
Building Permits and Housing Starts (US)
Consumer Price Index (Canada)
Gross Domestic Product (New Zealand)

Thursday, 19 March 2020 
Indicative Index Dividends
Dividends are in Points

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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