Markets bounce as investors watch authorities’ response to pandemic - 20.3.2020

Dollar strengthening halts

US stock market ended modestly higher on Thursday. The Federal Reserve announced the opening of temporary dollar swap lines with central banks in response to heightened global demand for dollars. And Congress continued discussing a fiscal stimulus package of more than $1 trillion. The S&P 500 rebounded 0.5% to 2409.39. The Dow Jones industrial average advanced 0.9% to 20081.19. Nasdaq composite index recovered 2.3% to 7150.58. The dollar strengthening slowed further as the manufacturing index from the Philadelphia Federal Reserve Bank plunged to its lowest since June 2012 while the number of Americans who filed for unemployment insurance for the first time rose last week: live dollar index data show the ICE US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, rose 1% to 101.76 but is lower currently. Futures point to higher openings today.

CAC 40 leads European indexes’ rebound

European stocks' drop halted on Thursday after European Central Bank announced a new “Pandemic Emergency Purchase Programme” on Wednesday night to buy bonds worth 1.1 trillion euros throughout this year. Both EUR/USD and GBP/USD continued their declines yesterday with both pairs higher currently. The Stoxx Europe 600 index rebounded 2.9% led by telecom shares. Germany’s DAX 30 gained 2% to 8610.43 despite the steep decline in German business sentiment as evidenced by the preliminary Ifo Business Climate Index drop. France’s CAC 40 rose 2.8% while UK’s FTSE 100 added 1.4% to 52151.61 as the Bank of England announced another 15 basis points rate cut to 0.1% and increased its bond purchases program.

Asian indexes rebound while Nikkei falls

Asian stock indices are are mostly higher today after modest gains on Wall Street overnight. Nikkei however ended down 1% at 16552.83 as yen resumed its climb against the dollar. Markets in China are rising after reports of no new infections on Wednesday in the province of China where the virus emerged in December: the Shanghai Composite Index is up 1.6% and Hong Kong’s Hang Seng Index is 4.3% higher. Australia’s All Ordinaries Index rebounded 0.7% despite continued climb of the Australian dollar against the greenback.

Brent rebounds

Brent futures prices are extending gains today. Prices rebounded yesterday from 20year lows after talk the Trump administration may intervene in oil-price war between Saudi Arabia and Russia with diplomatic pressure to get the Saudis to cut oil production and threats of sanctions on Russia. May Brent crude jumped 14.4% to $28.47 a barrel on Thursday.

BRENT rebounding below MA(200) 3/20/2020 Market Overview IFC Markets chart