More than £60billion was wiped off the stock market yesterday, taking total losses since COVID-19 pandemic hit to £793billion, despite Federal Reserve announcement pledging unlimited emergency cash to offset the coronavirus’ impact. The Fed also said on Monday that they would buy exchange-traded funds (ETF) that track the corporate bond market, a first for the U.S. central bank.
EQUITIES
Despite a massive new intervention from the Federal Reserve, the stock market moved lower again on Monday after a divided vote by Congress failed to pass a $2 trillion coronavirus relief package for the second day in a row. The failed vote on Monday came after lawmakers have been locked in heated negotiations, with Democrats criticizing the Republican bill for focusing too much on bailing out companies and not doing enough to help citizens or provide enough funding to medicals.
On Monday, major benchmark closes as follow:
S&P 500 Index : $2,237.40, down -67.52 points or –2.93%
Dow Jones Industrial Average : $18,591.93, down -582.050 points or -3.04%
Nasdaq Composite Index : $6,860.67, down -18.84 points or -0.27%
European exchanges are not excluded in recording losses, with London's FTSE 100 down -3.79%, Germany's DAX -2.10% and France's CAC 40 lose -3.32%. Italy's closed -1.09% lower and pan-European Stoxx 600 index shed -4.30%.
Major Asian markets opened sharply higher today. Japan's Nikkei 225 gained 5.7%, while South Korea's KOSPI surged more than 5%. Australia's S&P/ASX 200 increased 3%. Hong Kong's Hang Seng (HSI) gained nearly 4% in early trading, and China's Shanghai Composite (SHCOMP) was up around 2%.
OIL
Oil prices moved higher on Monday, while U.S. gasoline prices plunged more than 30% to a record low as global restrictions on travel to slow the spread of coronavirus destroyed demand for fuel.
Brent crude futures ended the session up 0.19% at $27.03 a barrel while WTI crude futures for May delivery rose 3.23%, to $23.36 a barrel.
Currently, Brent crude is trading at $27.88 per barrel while U.S. benchmark WTI crude trading at $24.32 per barrel, as of writing time (UTC+08.00).
CURRENCIES
The dollar DXY is at $101.71 against a basket of currency trading partners, after U.S. Federal Reserve announcement. Dollar fell today, responding negatively to intraday swing. Dollar losses ground against most of currencies including AUD (-1.61%), NOK (-1.60%), NZD (-1.10%), MXN (-0.98%), SEK (-0.96%), JPY (-0.90%), EUR (-0.71%), GBP (-0.75%), RUB (-0.40%), and SGD (-0.32%). This depreciation is believed to be due to the influx of returning investors in the precious metals market.
GOLD
Gold price action started to skyrocket this morning after news from the Federal Reserve crossed the wires. Fed detailed extensive new monetary policy tools in aims of countering the worrisome spike in recession risk largely attributed to economic fallout from the coronavirus pandemic.
In the commodity sector, gold currently trading at $1,584.90 per ounce, while stands around $1,592.60 per ounce for gold futures of writing time, higher than yesterday.
Meanwhile, silver trading at $13.68, platinum trading at $657.00 and palladium trading at $1,736.00.
ECONOMIC OUTLOOK
Fiscal measures and immediate economic relief action from the governments have gone some way to help mitigate some of the damage, but there’s widespread acknowledgement that more action will be needed in the coming months to keep the economy moving. Especially measures to help the most vulnerable businesses, unemployment and households and prevent a deeper economic slump.
Given this dire situation, gold’s long-term outlook is solid, with many analysts estimating higher highs for the precious metal once the coronavirus uncertainty has been resolved.
To date, number of confirmed worldwide cases for COVID-19 pandemic has now reached more than 380,000 today affecting 195 countries and territories around the world. The death toll from the novel coronavirus has now topped 16,000 – including 582 in the U.S.
TECHNICAL OUTLOOK
[XAUUSD]
Though gold price skyrocket today, latest chart is showing a turnaround. Looking at the head and shoulder and momentum pattern, we’re predicting a bullish-to-bearish reversal.
