Daily summary: Global equity markets rose on coronavirus optimism

• Spread of the coronavirus may be slowing,
• European indexes end higher for second day,
• US Dollar falls further,

 

European indices  finished today’s session higher amid optimism over a slowdown in the spread of the coronavirus in key countries, prompting several European governments to start looking ahead to easing lockdowns. The death rate in Italy has been declining for several days, while Germany reported fewer than 4,000 cases for the second consecutive day, compared to an average of 6,000 over the last few days. However, the daily rate of deaths rose again in Spain and New York. French health minister Olivier Veran warned that the country has not yet reached the peak of the coronavirus pandemic. Accordingly to the scientists, upcoming weeks  will probably be one of the deadliest weeks of the pandemic in the UK.

The European Central Bank (ECB) announced new easing measures regarding collateral. According to the statement, “ECB adopts an unprecedented set of collateral measures to mitigate the tightening of financial conditions across the euro area."Measures include a temporary increase in the Eurosystem’s risk tolerance in order to support credit to the economy, easing conditions for the use of credit claims as collateral, the introduction of a general reduction of collateral valuation haircuts, and a waiver to accept Greek sovereign debt instruments as collateral in Eurosystem credit operations. The ECB mentioned it “will assess further measures to temporarily mitigate the effect on counterparties’ collateral availability from rating downgrades”.

Major European indexes traded in green today: the DAX 30 jumped 2.7%,  FTSE 100 gained  2.1% and the CAC 40 advanced 2.0%.

 

During today’s session US indices are extending yesterday’s sharp rally, on hopes that the coroavirus pandemic will peak soon, allowing at least a partial lifting of lockdown restrictions on the economy. Dow Jones rose 3.2%, S&P500 advanced 2.7% and NASDAQ gained 2.1 %.

Oil prices erased some of the early gains despite hopes that OPEC and Russia will agree to cut production at a meeting on Thursday. OPEC announced that is willing to take coordinated actions with other oil-producers in order to stabilize the market. However  potential cuts will depend on volumes other producers like the US are willing to cut. Earlier this session, Brent prices rose more than 3% to above $34 a barrel. The US crude traded around $26.6 a barrel after hitting a session high of $27.23.

Gold prices are trading slightly lower as risk-on moods prevailed on the markets today. The  Dollar index dropped below 100.00 price level, as investors risk appetite carries forward from the prior trading session. If the shift in sentiment lasts, the US Dollar could remain under pressure while coronavirus fears fade.

Economic calendar for Wednesday is almost empty. Besides FOMC Meeting Minutes and Crude oil inventories, there are no major, market moving data scheduled for release tomorrow,  therefore trading is likely to be dominated by headline news.

EUR/USD is trading around the major long-term trendline. In February Euro bounced off of the line, however since then the trendline has been re-tested again twice. A break below 1,0624 support level may accelerate further downside movement towards  2017 lows located around 1.03 level. Source: xStation5

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