Daily summary: Sharp rebound on global equity markets

US  indices traded sharply higher today amid reports that U.S. officials are getting closer to approving a reported $2 trillion coronavirus package to support the economy and to offset the economic impact of the coronavirus outbreak. However despite the better sentiment that prevailed in the markets today, investors are still afraid of the potential size of the  recession. Markets will be closely following further reports from Washington, where US lawmakers are to vote on a coronavirus rescue package that includes economic support measures such as tax breaks, checks and saving large companies from bankruptcy. Both sides are also allegedly negotiating issues related to the use of measures to reduce wages. The Dow Jones is trading 7.78% higher, the S&P 500 rose 6.27% and the Nasdaq gained 5.33% .

 

The rebound could also be seen on European stock markets. The DAX 30 surged 11.49% , CAC 40 finished 8.39% higher and FTSE 100 gained 9.35%  as investors around the world  welcomed FED’s announcement regarding fiscal stimulus measures and  unlimited dollar funding. Also German government agreed a package worth up to €750 billion and authorized an increase in new borrowing for the first time since 2013. European indices traded higher even as the Eurozone PMI service sector survey came well below expectations.

The Oil price erased some gains in afternoon trading. Oversupply concerns eased slightly as regulators in Texas are considering slashing the output there for the first time in almost 50 years and US government plans to send a team to Saudi Arabia to work on solution to stabilize the oil market. Still, market volatility is set to continue as investors remain concerned about the collapse of the OPEC+ deal and the prospects of a global recession.  WTI oil is up 0.60%  and Brent crude rose 1.2%.

 

Gold prices continue to grow as investors took advantage of last week's sale off and invested in precious metals in anticipation of another long period of low interest rates. Also lockdown of South Africa’s gold mines  affected prices as well. Gold gained 5.46% and silver increased  6.76 % . Precious metal prices have been lifted also by easing pressure regarding financing problems, as evidenced by the sharp decline in demand for dollars at the European Central Bank's weekly swap auction.

 

The publication of several macroeconomic readings is scheduled for tomorrow.
First investors will get to know RBNZ decision on interest rates. Next German Final Ifo Business Climate index  and Consumer Price Index from Britain will be published. In the afternoon the US will publish Durable Goods Orders. Oil traders should pay attention to the U.S. Crude Oil Inventories data. Needless to say, financial markets will pay attention to coronavirus updates.

 

Investors sentiment has improved as China decided to take of some restrictions on travel, the Federal Reserve promises unlimited US Dollar funding and a US fiscal package soon might be approved by the Congress. However, the risk of a further declines still prevails and trader confidence remains low.