Daily summary: Global equity markets bounce back thanks to FED

Today's trading session on the US market started nervously after the Dow dropped below 20,000 a level not seen since 2017. However global indices managed to erase early losses after the FED announced the creation of a Commercial Paper Funding Facility (CPFF) the purpose of which is to support the flow of credit to households and businesses during the spreading coronavirus outbreak. Now Fed will be able to buy short-term debt issued by companies, supporting activity and jobs across the economy.  During a news conference Treasury Secretary Mnuchin advised that the government is looking at sending direct cash payments to Americans as part of a huge $850 billion stimulus package. The Dow surged 4.3%; the S&P 500 traded 5.1% higher; and the Nasdaq rose 5.6%. After volatile session European indices also finished trading in green. DAX gained 2.25%, CAC40 advanced 2.84%, and FTSE100 rebounded  2.8%.

Gold prices also rebounded today after five days of decline, as the virus risks and recent massive sell-off on global markets continued to support safe-haven assets. Also further monetary easing from major central banks also helped gold prices, which rose by 2.86%.

 

We had some mixed data from the US today. Industrial production rose by 0.6 percent from a month earlier in February 2020, recovering from a revised 0.5 percent drop in the January. The reading was above market consensus of a 0.4 percent growth. Retail sales in the US wentdown 0.5 percent from a month earlier, following an upwardly revised 0.6 percent increase in January. The data was below market expectations of a 0.2 percent rise. It was the largest decline in trade since December 2018. The German ZEW sentiment index disappointed investors, dropping to -49.5, well below investors expectations.

Tonight Australian sales data will be published, while tomorrow traders should pay attention to the CPI reading from Canada and the GDP data from New Zealand. There are no major, market moving data scheduled for release tomorrow, therefore trading is likely to be dominated by headline news  and further  spread of the pandemia. Also the US Federal Reserve after today's announcement regarding CPFF has significantly raised expectations that other central banks can follow suit.