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Alice Blue - Market Talk_March 05, 2020

Global stock markets turned higher Wednesday

Global stock markets on Wednesday extended to days of fluctuations, as investors weighed in on the economic impact of the virus outbreak and Joe Biden’s big gains in Democratic primaries.

European indices were up more than 1% and Wall Street futures were pointing to similar gains on the open following mixed performance in Asia.

Markets appeared unaffected on Tuesday with the US Federal Reserve’s cut in half a percentage point rate and a pledge by a group of seven industrialized nations to support the economy that included no special measures. The S&P 500 index declined 2.8%, its eighth daily decline in nine days.

China, Australia, and other central banks have also cut rates to curb economic growth in the face of anti-virus controls that are disrupting trade and manufacturing. But economists have warned that cheaper credit may encourage consumers, but rate cuts may not reopen factories that have closed due to quarantine or lack of raw materials.

IG’s Jingyi Pan said more cuts could give “limited support”. “Apart from perhaps vaccines, there may be very few quick and easy solutions to reduce the setback for global markets.”

This seems to have been supported to some extent by former US Vice President Biden’s revisited presidential bid, with some investors considering the liberal candidate more favorable for business than the more leftist Bernie Sanders.

In Europe, London’s FTSE 100 was up 1.4% to 6,811 while Germany’s DAX rose 1.1% to 12,110. France’s CAC 40 rose 1% to 5,446.

On Wall Street, the future of the S&P 500 rose 2.1% and the Dow Jones Industrial Average rose 1.8%.

US markets have fallen 11% since setting the record two weeks ago.

In Asia on Wednesday, the Shanghai Composite Index rose 0.6% to 3,011.67 and the Nikkei 225 in Tokyo rose 0.1% to 21,100.06. Hong Kong’s Hang Seng gained 0.2% to close at 26,222.07.

Cospi rose 2.2% to 2,059.33 in Seoul, with the government announcing a $ 9.8 billion spending package to pay for medical supplies and assistance to businesses struggling with travel, auto manufacturing, and other industries.

In another sign of US investor caution, yields on the 10-year Treasury fell below 1% for the first time in history. It was at 0.95% in the early hours of Wednesday.

A small yield – the difference between market value and whether investors hold if they hold the bond to maturity – indicates that traders are transferring money to bonds as a safe haven out of concern about the economic outlook.

Fed Chairman Jerome Powell acknowledged that the ultimate solution to the virus challenge would have to be taken from health experts and others, not from central banks.

The Fed has a long history of defending the market with low rates and other stimuli, which has helped this bull market stay on record for the longest time in US stocks.

U.S. out of regularly scheduled meetings after the 2008 global crisis. The rate cut was the Fed’s first. This led some traders to think that the Fed could overcome even a larger economic impact than fear.

Benchmark US crude in electronic trading rose 82 cents to $ 48.00 a barrel on the New York Mercantile Exchange. The contract rose 43 cents on Tuesday. Brent crude, used to price international oils, added 84 cents to $ 52.70 a barrel in London. It fell 4 cents last season.

The dollar rose to 107.55 yen from Tuesday’s 107.12 yen. The euro fell from $ 1.1171 to $ 1.1131

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About Dwipen Gogoi

Dwipen Gogoi, MBA (IB and IT) and PGDFT from Pune. (Technical Analyst of AliceBlue) I am a You Tuber, Blogger and doing Technical Analysis last 10 years in Stock, Commodity and Forex Market. i am creating various trading strategies for day traders, swing traders, scalp traders.

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