Wednesday, March 18, 2020

Asia Times: US to give its citizens US$1,000 each; Brent falls below US$30 per barrel

Tags
  • Dollar
  • Gold
  • Yen
  • Stocks
  • Oil
  • AUD

03182020a

Market Recap: US to give its citizens US$1,000 each; Brent falls below US$30 per barrel

Wall Street rebounded on Tuesday, after the third biggest selloff in history on Monday thanks to additional stimulus from the US government. The Trump administration is reportedly trying to push for a US$1.2tn stimulus that includes sending US$1,000 to US citizens. The Fed restarting its emergency lending program to keep the money market liquid via commercial paper purchases likely also helped stocks in the US to make gains on Tuesday. But the rebound was nowhere near enough for the equities market to recover Monday's losses. In addition, the S&P500 has not gained for more than one day in a row for the last 24 trading sessions and has fallen 17 out of those 24 trading days.

Indexes Daily Change (%) Net Change Closing Price
Dow Jones +5.20% +1,048.86 21,237.38
S&P500 +6.00% +143.06 2,529.19
Nasdaq +6.23% +430.19 7,334.78
*Source: Bloomberg

In the forex market, the greenback surged against every major currency as demand for the dollar grew stronger amid expectations for greater fiscal stimulus from the US government to help negate the negative economic impact of the virus. Retail sales advance in the US for February fell below expectations, declining 0.5% MoM from January instead of the census for a 0.2% growth. But industrial production for February was better-than-expected, growing 0.6% over economists' forecasts of a 0.4% growth.

The Aussie was the biggest laggard among major currencies, falling to a 17-year low against the dollar to 0.6000's level. The weaker Australian dollar is likely to concern policy makers in Australia as the weaker currency is unlikely to boost exports in the country's key drivers such as education amid the coronavirus outbreak but put pressure on imports and subsequently consumer demand as costs for imports rises.

03182020b

Elsewhere, safe haven assets faced a selloff with the exception of gold on Tuesday. The precious metal recovered slightly after a five-day rout during which it was likely detached from its safe haven properties. The yen declined against the dollar and US Treasuries faced a selloff to push benchmark 10-year yields 36bps to back above 1%.

Safe Haven Assets Daily Change (%) Net Change Closing Price
Gold +0.94% +14.20 1,528.30
Silver -2.29% -0.30 12.13
JPY -1.77% -1.87 107.70
*Source: Bloomberg
US Treasury yields Daily Change (bps) Yield (%)
2-Year +13.3 0.49%
10-Year +36.0 1.08%
30-Year +40.0 1.68%
*Source: Bloomberg

Oil prices extended losses on Tuesday as worries for a global economic slowdown continues to dominate oil markets. Brent crude fell 4.39% on Tuesday to US$28.73 per barrel.

Oil Futures Daily Change (%) Net Change Closing Price
Brent Crude -4.39% -1.32 28.73
WTI Crude -6.10% -1.75 26.95
*Source: Bloomberg

Most of Asia started Wednesday's trading session higher, tracking gains in the US from Tuesday. Japanese stocks are likely to find some relief in a weaker yen, while the ASX200 looks set for losses as a result of tougher measures announced by the Australian government to curb the spread of the virus in the country. Australian Prime Minister Scott Morrison warned Australians not to travel overseas and banned indoor gatherings of more than 100 people. Futures tracking major equity indices in the US were trading in the red on Wednesday morning, probably as equity prices in the US look more likely to normalise after Tuesday’s gain.

Asia Daily Change (%) Net Change Last Price As of (GMT +8)
Nikkei Index +0.72% +122.85 17,116.65 8:54:50 AM
KOSPI Index -0.98% -16.35 1,656.09 9:14:50 AM
ASX200 Index -3.65% -193.31 5,100.10 9:14:35 AM
*Source: Bloomberg
US Futures Daily Change (%) Net Change Last Price As of (GMT +8)
Dow Futures -2.99% -624.00 20,236.00 9:26:46 AM
S&P500 Futures -3.18% -79.00 2,406.00 9:26:46 AM
Nasdaq Futures -3.42% -252.50 7,139.50 9:26:46 AM
*Source: Bloomberg

Economic releases for the day ahead include (all timings in GMT +8):

  • Eurozone Feb Inflation Rate (CPI) (F) (6pm)
  • US Feb Housing Starts (8.30pm)