News

US Stock Futures Tumble despite Fed’s Emergency Action

Equities

Major US stock-index futures kicked off the week on a gap lower and tumbled to hit the limit down despite Fed's emergency action. The Covid19 outbreak continued to weigh on the economic outlook and risk sentiment. The Federal Reserve took second emergency action to stop the market bleeding and ease the impact on the economy. The Fed lowered interest rates to 0-0.25% range and restarted a $700 billion quantitative easing program. In his presser, Chairman Powell stated that the economy was on solid foot going into the virus outbreak, but the virus will have a significant impact on the economy in the near term, and the economic weakness abroad will weigh on US exports for a long time, forcing such measures. On the future path of interest rates and quantitative easing, he said that he doesn't think that negative rates are appropriate for the US, and the Fed will not have a weekly or monthly cap for asset purchases and will go in strong. US stock-index futures hit limit down where the Dow Jones stopped at 21944, the S&P500 at 2566, and Nasdaq futures at 7554.

USD

The dollar index, which measures the greenback against a basket of major currencies, tumbled to 97.65 following the Fed's decision. The Federal Reserve took significant easing measures to offset the impact of Coronavirus on the US economy. The Fed lowered interest rates by one basis point to 0-0.25% and started a $700 billion quantitative easing program. Treasury yields moved south where the US 10-year yields plunged to 0.631%, and the US 30-year yields declined to 1.248%. The EURUSD edged higher to 1.1199, and the GBPUSD bounced to $1.2423.

JPY

The Bank of Japan concluded its monetary policy meeting by maintaining interest rates at their levels but increasing the annual pace of ETF purchases to 12 trillion yen from 6 trillion yen prior and strengthening the stance of asset purchases. The USDJPY hovered near 106.50, the EURJPY recovered to 119.90, and the GBPJPY held steady near 132.

Metals

Gold prices started the week on a gap higher as the Fed declared several measures to combat the consequences of Covid 19 on the US economy. The price of a gold ounce rose as high as $1575, but couldn't hold gains into the European open and fell to $1532. Meanwhile, the price of a silver ounce declined to $13.97, its lowest level since November 2018, while palladium futures rebounded to $1759 from $1581.

Oil

Oil prices tumbled as the fears and effects of the Coronavirus outbreak lingered further. The outbreak forced central banks around the globe to take action to ease the impact on their economies but failed to cool the market meltdown until now. On the other hand, the clash between oil producers and the emerging price war weighed on price outlook. On Friday, Trump asked to fill the strategic reserve to ease the impact of the drop in prices on shale producers. The West Texas Intermediate crude futures dropped to $29.80, and Brent futures fell to $31.51. Major Economic Events

GMT Country Event Expectation Previous

10:00

EZ

Eurogroup Meetings

-

-

12:30

US

NY Empire State Manufacturing Index (Mar)

4.4

12.9

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