Daily summary: Global equity markets rally pauses

• US indices comes under pressure despite a massivel fiscal stimulus package
• BOC emergenycy rate cut
• Oil Prices Fall Sharply

 

Risk assets returned their broader downtrends today after experiencing a short-lived rebound earlier in the week. The oil and stocks went higher based on investor hopes that unprecedented stimulus measures  and massive amounts of liquidity from the FOMC will be enough to offset the economic impact of the coronavirus outbreak.
However, the tragic macroeconomic data from this week, such as the historical drop in Markit PMI, the sharpest decline of consumer sentiment since October 2008, or a record 3 million surge in US weekly jobless claims offered the first glimpse of the extent of the economic damage from the outbreak, which has forced several companies to shutter stores and announce layoffs. Therefore it should be assumed that risk aversion may persist in the markets, as more and more investors will be concerned that central banks and governments around the world might not be able to stop the recession from growing.

 

European  indices end session sharply lower. Today several British officials, including Prime Minister Johnson, tested positive for coronavirus, raising concerns about the rapid spread of the pandemic. The FTSE 100 closed down more than 5% The CAC 40 Index decreased 3.91% The DAX Index fell 4.08%. 

 

US indices managed to erase some early losses as the House of Representatives passed the $2 trillion coronavirus fiscal stimulus package, Despite this fact the stocks in the US are still trading significantly lower. Dow Jones went dow 2.42% S&P lost 2.27% and  NASDAQ is trading 2.28 % lower. 

 

Canadian indices traded significantly lower today despite the fact that the Central Bank of Canada lowered interest rates  by 50bps to 0.25% in an emergency move that brings borrowing costs to its effective lower bound and initiated two new programs aiming to cushion the impact of the coronavirus outbreak. S&P/TSX  fell 4.49% during today’s trading session.

Oil prices plunged another 8% on Friday as investors remain very concerned about the rapid spread of the coronavirus in the world as the US surpassed China in number of infected cases and become the epicenter of the pandemic. Oil prices have lost about 60% since January, due to the coronavirus and oversupply fears after Saudi Arabia started a price war for market share. Seven major oil companies, including Saudi Aramco,  announced they will cut capital expenditure following a collapse in oil prices. WTI crude traded around $21.5 per barrel and the Brent crude  went s below $25 a barrel during today's session.

 

On Friday gold prices traded nearly flat around $1624 an ounce. This week gold soared more than 8% which was the  highest weekly  gain since December of 2008.

 

Economic calendar for Monday does not seem to be particularly interesting. Investors should pay attention to Swiss KOF Economic Barometer and retail sales from Spain. Also German Preliminary CPI data and Dalas Fed Manufacturing Index reading might cause some price movements. However all the spotlight is on virus cases – if they are contained, markets could rebound.

EUR/USD is trading above 1.10, recapturing the level as the dollar weakened today. The most popular currency pair found some support around 1.1060 level after failed attempt to broke above the resistance at 1.1094 which we have defined yesterday.  Until EUR/USD is trading between the 1.1000 psychological level and previously mentioned resistance at 1.1094, traders should expect some sideways movement. Source:xStation5

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