Daily summary: Turmoil on the financial markets

•  Global equities extend declines
• FED delivered an emergency interest rate cut
• Gold traded below 1500 USD/t.oz

Global Equity Markets plunged as Fed made another unexpected rate cut and initiated a massive $700 billion quantitative easing program, aiming to protect the US economy from the effects of the coronavirus. Unfortunately these actions were not enough to calm the markets. The weekend’s news about the coronavirus outbreak was not helping sentiment either. Number of infected cases in the U.S. rose to 3,814 and 70 deaths, while 174,893 people are infected worldwide and 6,687 have already died.

Before the session, US futures contracts pointed to a lower opening and hit their lower trading limits.
Right after the opening  US indices plunged more than 9% extending previous losses. Trading was halted  for 15 minutes as the sharp sell-off on the S&P 500 triggered a so-called circuit breaker. This situation has already taken place for the third time in the last few days. Later afternoon stocks tried to erase some losses and at end of the day DAX finished 5.3% lower, CAC40 dropped 5.9%, FTSE lost 4.7%. US indices are also trading in red. Dow Jones fell 9%, S&P500 is trading 8.05% lower , NASDAQ weaken 8.06%.

Bearish bias still dominates the financial markets and it seems that only a vaccine for the coronavirus may be able to change the negative sentiment. Associated Press informed that the vaccine trial starts this Monday.

The US dollar continued to depreciate today against most of the major currencies. American currency seems to be now less attractive among other safe heaven assets, as interest rates are now very low.

Major precious metals came under pressure as well, due to ongoing concerns about the spread of coronavirus and its impact on the global economy. Gold prices dropped below $1,500 an ounce, a level not seen in three months. Silver fell sharply over 12% to $12.98 an ounce, a lowest level since 2009. Platinum traded around $670 an ounce, its weakest level since 2002.

Oil prices also remained under heavy pressure today, despite an unexpected burst of monetary stimulus from the Fed, the RBNZ and the Bank of Japan. Oil crude fell 8.66% and Brent dropped over 11%.

We did not have many important macroeconomic publications today.
NY Manufacturing Activity slumped to -21.5 in March of 2020 from 12.9 in February, hitting the lowest level since March of 2009, widely below market expectations of 5.0. The new orders index went down to -9.3 from 22.1 in February. Optimism about the six-month outlook fell sharply to 1.2 from 22.9, with firms less optimistic than they have been since 2009.

On Tuesday investors should pay attention to the German ZEW Sentiment Index and retail sales figures from the US. Data from the British labor market will also be published tomorrow. During Asian session Japanese industrial production data and RBA Minutes of March Policy Meeting will be released. Apart from that, tomorrow’s economic calendar seems light.

Accordingly to the CNBC some of the US investors prefer to wait and see coronavirus cases peaking and falling in the U.S. before they will be willing to take on risk and buy shares again. Therefore traders should pay attention to incoming newsflow associated with the outbreak of the coronavirus and further actions taken by the central banks and governments.

EUR/USD - trading range we have defined between 1.1228 and 1.1063 doing a good job limiting the movements of this currency pair. The support level at 1.1063 is additionally being strengthened by the 200-session moving average (red line). Only a strong break out from this consolidation zone may lead to stronger price movements. Source:xStation5