What mattered last week and a preview of the week ahead
Tony Sycamore March 22, 2020 10:20 PM
What mattered last week: An extreme week of volatility as U.S. equity market fell ~15% as the spread of Covid-19 continued. The impact of Covid-19 via border shutdowns, social distancing measures as well as the obvious impact on health impact presents a huge challenge and likely to result in a recession in several countries. Central banks and governments responded by slashing interest rates, resuming/starting Quantitative Easing (QE) programs and boosting/announcing fiscal stimulus packages.
What mattered last week:
- An extreme week of volatility as U.S. equity market fell ~15% as the spread of Covid-19 continued.
- The impact of Covid-19 via border shutdowns, social distancing measures as well as the obvious impact on health impact presents a huge challenge and likely to result in a recession in several countries.
- Central banks and governments responded by slashing interest rates, resuming/starting Quantitative Easing (QE) programs and boosting/announcing fiscal stimulus packages.
- Yields in the U.S. 10-year bond fell back to near 0.84%, while gold closed ~$1500, after finding support near $1450.
- Crude oil futures fell to near U.S$20.00/bbl a level not seen since 2002, before a modest bounce into the end of the week.
- Locally, the ASX200 finished the week down another 13%, closing just above 4800.
- In FX, the AUDUSD closed almost -6% lower near .5800c but not before trading to a new cycle low at .5510.
For the week ahead, the key events are:
Australia: CBA business conditions PMI’s (Tuesday).
New Zealand: Balance of trade (Wednesday), ANZ Roy Morgan Consumer confidence (Friday).
China: Industrial profits (Friday).
Japan: Jibun bank business conditions PMI’s (Tuesday), BoJ Monetary Policy meeting minutes (Wednesday).
U.S: Markit business conditions PMI’s, new home sales (Tuesday), durable goods (Wednesday), jobless claims (Thursday), personal spending and income (Friday)
- Jobless claims (Thursday): A large rise in jobless claims is expected.
Canada: Nothing of note.
Euro Area: German and EA Markit flash PMI’s (Tuesday), GFK German consumer confidence (Thursday).
UK: Markit/CIPS business conditions PMI’s (Tuesday), inflation (Wednesday), retails sales and Bank of England meeting (Thursday).
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.