Global Fundamental Analysis 20/03/2020

OPENING CALL: The Australian share market is to open lower.


The Federal Reserve is likely to significantly boost its government-bond purchases beyond the $500 billion minimum it committed Sunday to buy amid market strains that sent interest rates higher rise in recent days.  


The Trump administration is considering intervening in the Saudi-Russian oil-price war with a diplomatic push to get the Saudis to cut oil production and threats of sanctions on Russia aimed at stabilizing markets, according to people familiar with the matter.


Overnight Summary





Australian Market

 Australia’s benchmark index closed 3.4% lower despite efforts to limit the coronavirus fallout with an emergency rate cut by the RBA and fresh government stimulus.  

The S&P/ASX 200 index fell 170.3 points to 4782.9. The energy and financial sectors dropped more than 7.0% each. The former was weighed by oil prices and concerns about demand, the latter by margin pressures from the RBA cutting rates and initiating quantitative easing. Qantas fell 15%, its biggest percentage drop since June 2012, after it canceled all international flights and stood down 20,000 workers on global travel restrictions.  


US Market

U.S. stocks jumped intraday after central banks deployed a flurry of emergency measures to try to buffer the global economy from fallout stemming from the coronavirus pandemic. 

The Dow Jones Industrial Average added 442 points, or 2.2%, to 20341. The S&P 500 advanced 2% and the Nasdaq Composite gained 3.9%, boosted by a rally in shares of technology companies.  

Policymakers have moved aggressively this week to try to stop strains in funding markets from aggravating what they believe will already be a severe halt to economic growth. In the last 24 hours, the Federal Reserve has launched a new lending facility to backstop U.S. money-market mutual funds and extended its currency exchange program with other central banks, while the Bank of England lowered its benchmark interest rate to a record low.  



Gold prices recovered some ground, settling modestly higher a day after falling to the lowest levels of the year, as governments and central banks moved to support the global economy, which has suffered under the spread of the COVID-19 pandemic.  

Gold for April delivery on Comex settled at $1,479.30 an ounce, up $1.40, or 0.09%, after posting a decline of over 3% a day earlier.  In other commodity markets, May wheat prices rose 26 3/4 cents to $5.35.  


Oil Futures

 Oil prices bounced off their lowest levels in 20 years, as investors absorbed a huge influx of central bank and government support measures against economic fallout from the coronavirus and Russia indicated it would like to see higher prices.  

The front-month April West Texas Intermediate crude contract, the U.S. benchmark, rose $3.07, or 15%, to $23.44 a barrel. On Wednesday, the contract plunged more than 24%, to settle at $20.37 a barrel on the New York Mercantile Exchange



The WSJ Dollar Indes was recently up 1.30% at 96.91.  


European Markets

European markets closed mostly higher following an interest-rate cut by the Bank of England and gains on Wall Street. The Stoxx Europe 600 gained 2.9%, the FTSE 100 advanced 1.4%, the CAC-40 was up 2.7%


Asian Markets

Japan’s Nikkei Stock Average ended down 1.0% at 16552.83, the lowest since November 2016, weighed by drops in SoftBank Group and electronics stocks.  

Falls in SoftBank Group shares alone account for two-thirds of Nikkei’s drop. SoftBank Group shares end down 17% at Y2,687.0, the lowest since July 2016, amid concerns about the value of its investments. The percentage drop is the biggest on record since its listing in January 1998.  

South Korean stocks slumped to a near 11-year closing low, as investors dumped equities for safer assets like the U.S. dollar on a panic selloff driven by the coronavirus pandemic. The benchmark Kospi fell 8.4% to close at 1457.64 — the lowest since July 2009 Airline, chemical, refinery and tech shares led the declines. The Kospi plunge was driven by offshore investors who turned net sellers of local stocks in preference for cash and the dollar

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