News & Analysis

Overnight on Wall Street: Wednesday 25 March 2020

March 25, 2020

By Deepta Bolaky
 @DeeptaGOMarkets

Equity Markets

The hopes of further stimulus, the Federal Reserve’s “infinite” QE program and unprecedented moves to get credit flowing in the economy have provided some support to the US stock market. On Tuesday, it was reported that the differences on the multi-trillion emergency package is being addressed and could be settled soon. Given the pace of the number of cases and the current impact of the coronavirus, the massive stimulus package would bring some calm to the financial markets. However, it should be highlighted that risk sentiment remains fragile as it is dependent on whether the virus spread will worsen more than anticipated or not.

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

Major US equity benchmarks experienced significant rebound with the Dow surging the most since 1933:

  • Dow Jones Average Industrial added 2,113 points or 11.4% to 20,705.
  • S&P500 rose by 210 points or 9.4% at 2,447.
  • Nasdaq Composite ended 557 points or 8.1% higher at 7,418.

Currency Markets

In the FX market, major currencies were mixed against the US dollar. As global equities recovered a semblance of normality, there was less demand for haven currencies overnight. The British Pound and the Antipodeans were among the best performers.

The Aussie dollar continues to rebounded slightly lifted by an improvement in risk sentiment and a weaker US dollar. As of writing the AUDUSD pair is currently trading at 0.5980 level. However, the rout in the commodities market and the RBNZ’sannouncement of NZD250m of quantitative have hammered the buyers’ attempt to reclaim the 0.6000 level.

The New Zealand dollar found intermediate support from a better-than-expected Trade Balance data and RBNZ’s bond-buying purchases. The kiwi is currently buying at 58.40 US cents.

The British Pound bid well against the US dollar and the Euro amid a broad-based improvement in risk. The UK is finally in lockdown which also brought some reassurance that the Prime Minister is taking action to limit the spread of the virus. However, on the data front, the PMI figures are indicating that the UK could be heading into a deep recession.

Commodities

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. The overall optimism helped Brent Crude and WTI to rebound and consolidate around $27 and $24 levels.

USOUSD (Hourly Chart)

Source: GO MT4

However, a bearish environment will prevail for crude oil prices until there is more stability on the geopolitical front. Amid the oil price war, traders are looking for clues that Saudi Arabia and the US will reach some sort of agreement to rebalance the oil markets.

Gold has resumed its upside momentum after investors have been reassured that central bankers and governments are injecting liquidity in the markets. The precious metal is on track to recoup the losses made in the past two weeks. As of writing, the XAUUSD pair is trading above the $1,600 level.

Key Upcoming Events

Trade Balance, Exports, Rate Statement and Interest Rate Decision (New
Zealand)
IFO – Business Climate, Current Assessment, and Expectations (Germany)
Consumer and Producer Price Index, and Retail Price Index (UK)
Durable Goods, Nondefense Capital goods, and Housing Price Index (US)
SNB Quarterly Bulletin (Switzerland)

Thursday, 26th March 2020
Indicative Index Dividends
Dividends are in Points
ASX200WS30US500US2000NDX100CAC40STOXX50
0.04800.1170.126000
ESP35ITA40FTSE100DAX30HK50JP225INDIA50
0010.08000.581

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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