• Dollar surges
• US stocks extend losses
• Crude oil down over 18%
• US stocks extend losses
• Crude oil down over 18%
Global equity markets slumped today despite measures taken by major governments and central banks across the world in order to keep financial markets functioning normally.
Today three major European central banks namely The European Central Bank, the Bank of England and the Swiss National Bank all held dollar liquidity sales . This type of coordinated funding injection between banks have not been seen since the last financial crisis.
The high demand in these auctions settled investors nerves however some analysts said that given the widespread nature of the dollar shortage, the Fed's swap lines with the major central banks may not be enough.
During today’s volatile and nervous session S&P went down 7.52%, Dow Jones loses 8.37% and NASDAQ dropped 6.62%. European indices finished another session in red. DAX went down 5.47%, CAC40 lost 5.94 % and FTSE100 traded 4.05 % lower.
Today dollar strengthened as inverstors continue to run away from riskier currencies and seek for liquidity and funding since many businesses, retailers and plants in the US are closed already. As a result the dollar index went up above 101, the level last seen almost 3 years ago.
The British Pound went under heavy pressure during the session and hit its lowest level since 1985. Markets expect that the Bank of England will cut interest rates to the effective lower bound (0.1%) and that will restart its QE program as the coronvirus continues to spread across the UK.
Oil prices slumped today as inventories in the United States increased by 1.954 million barrels in the week ended March 13th of 2020, following a 7.664 million gain in the previous week and compared with market expectations of a 3.256 million gain, according to EIA Petroleum Status Report. Gasoline inventories went down by 6.180 million barrels after decreasing by 5.048 million in the previous week and compared with market consensus of a 2.89 million decline. WTI dropped by massive 18.88% and Brent went down over 11%.
Precious metals trade lower as well during today’s session. Gold fell 2.61% and silver lost over 5%.
Of course markets are still very concerned about the worldwide impact of the pandemic. Investors need to see the number of infections slow before markets can find a bottom, analysts say. At the moment, the number of new cases reported in China, where the virus emerged in December, is declining but infections in the United States, Europe and elsewhere are increasing.
Tomorrow, investors should pay attention to data from the Australian labor market and the speech of RBA Governor Lowe. Next the Swiss National Bank will present its interest rate decision and monetary policy assessment. Later in the afternoon latest reading of the Philly Fed manufacturing index will be published.
Brent Crude Oil (OIL) price plunged today and is currently testing its 2016 lows at $26.39 per barrel. If the bearish bias remains then the next level of support is located at $16.87 per barrel. Source: xStation5
