I’m sorry, what now?
Archives of “March 2020” month
rssUS Major indices end the session with mixed results
Going into last hour the major indices were trading at:
- S&P index at 2552.47
- Nasdaq index at 7592.58
- Dow index at 21903.93
The major indices are closing at:
- S&P index 2475.56, up 28.23 points or 1.15% – down 72 points in the last hour
- NASDAQ index 7384.29, down -33.56 points or -0.45% – down 208 points in the last hour
- Dow index 21200.55, up 495.64 or 2.39% – down 703 points in the last hour
Thought For A Day
Europe mulls suspending accounting rules to aid virus-hit banks
That’s an ugly headline
European leaders are considering suspending IFRS 9, which makes banks take losses on doubtful loans at an earlier stage than before. The ECB already said it will be flexible in enforcing existing regulations.
Call me crazy, but why would you expect anyone to invest in a bank when they can mark bonds at anything they like?
German parliament backs EU750B crisis spending package
That’s a big number
Germany’s parliament approved aid for smaller firms and the self-employed. It includes a 156B euro supplementary budget.
That’s a huge number. Germany’s GDP is one-fifth of the US which just unveiled an enormous $2 trillion package. In relative terms, this is much bigger. That said, the details matter. Parts of both programs are loan guarantees and those don’t necessarily cost anything because they will be paid back.
$2 trillion doesn’t buy what it used to
Equity futures lower despite huge US stimulus
US Senators have reached a bi-partisan deal on a $2 trillion bill that includes payments to just about everyone. Canadian parliament also agreed on an $82B package.
Even with that US equity futures are 1.8% lower. That can change in a hurry but every bit of ‘good’ news from the Fed or Treasury is met with a wave of bad news about the virus.
The numbers from Spain were jarring today with 7937 new cases from 5,552 yesterday and 443 new deaths. With 3,434 dead, they’ve now surpassed the official count from China.
Numbers are also rising in Tokyo and the threat of a lockdown there is growing.
Over news hits home like Prince Charles testing positive and NBA player Karl-Anthony Towns revealing his mother is in a coma.
I think this is an important moment for risk assets in general. I believe the Fed’s extraordinary actions have averted an acute financial crisis but the scale of the economic damage is coming into focus and even $2 trillion isn’t enough to fix it.
All told, I think the rally in equities and unwind in the dollar can continue for another day or two. If I’m wrong and it falls apart today, then it can get ugly fast.
Germany’s Scholz: There is no blueprint for tackling a crisis like this
Scholz says the government is doing everything it can to deal with the fallout
- There are hard weeks ahead but we can prevail
- We are focusing on targeted measures that work fast
The headline remark says it all. These are unprecedented times, not just for the market but for the world as well. Fiscal and monetary actions are helpful, but strong and decisive leadership is among the things most needed to battle through this.
European pre-market: Risk currencies lead the way
Risk is faring better as the US reaches a stimulus agreement
The dollar continues to sit at the bottom but is accompanied by the yen and franc on the day, as risk is keeping more optimistic to start European trading.
The aussie, kiwi and loonie have extended gains after the US reached a bipartisan agreement on the stimulus package to combat the economic fallout from the virus outbreak.
AUD/USD is back above 0.6000 as price also holds above both the key hourly moving averages, hinting that the near-term bias is now more bullish.
The pound is also continuing to capitalise on the weaker dollar after a solid performance yesterday, with cable now rising above the 1.1800 level.
But besides the aussie and kiwi, the other major currencies are sitting in a bit of a limbo against the dollar. Sure, they are paring losses against the greenback from over the past few weeks but the near-term technical picture remains more complicated.
As things stand, they are all (except the yen) sitting in between both the 100 and 200-hour moving averages against the dollar so far on the week still.
This points towards a more mixed mood that any significant dollar retracement may still be fleeting as the market continues to deal with the virus fallout.
As such, I would argue that we’re still a bit caught in the middle between a full-on ‘retracement week’ and a ‘early rally, late fizzle’ kind of week at the moment.
But for now, risk is sitting in a better spot but it is still too early in the day to draw conclusions. We have to wait and see what Wall Street has to say as well later today.
Another race for the loudest printing press has begun: #Japan is leading the game but ECB and Fed are in pursuit.
Nikkei 225 closes higher by 8.04% at 19,546.63
Three solid days of gains on the trot for the Nikkei
The Nikkei closes at its highs for the day as equities are getting a boost from the US reaching a stimulus deal to combat the economic fallout from the virus outbreak.
The mood among Asian equities is also more positive after solid gains from Europe and Wall Street yesterday, with the Dow posting 11% gains – the most since 1933.
The Hang Seng is up by just over 3% with Chinese indices also up by just over 2% as we approach the closing stages of Asia Pacific trading.
The overall risk mood is leaning more positive but again, a deal in Washington is very much expected so can this stay the course and keep the risk mood upbeat today?
We’ll have to wait and see. The timing couldn’t be more tricky as we have seen three weeks of carnage in the market and bear market bounces tend to be among the sharpest.
In the currencies space, the aussie and kiwi are leading the charge as they both surged higher after the US agreement. The dollar remains on the back foot still as the market seeks a calmer mood so far on the trading week.