Coronavirus Pandemic [Market Brief]
The Coronavirus pandemic has dominated the news with its surge worldwide as Central Bankers loosen monetary policies and Governments ramp up fiscal stimulus packages. The number of Coronavirus cases has more than doubled in a week to the region of 330,000 cases. The term of week had been ‘Social Distancing’ as world leaders enforce lockdown measures to mitigate the spread of the coronavirus.
In the previous week, it began even before the markets had open on the Monday when the FOMC had cut interest rates by 100 basis points on Sunday evening to a range of 0-0.25%. A key point to note was the Fed did not even wait till Wednesday when the decision was due to take this step and this set panic in the markets with a 3000 point decline in the Dow Jones. Throughout the week the US government have continue to raise their grants to now almost $2 trillion dollars rescue package.
UK Chancellor of the Exchequer Rishi Sunak had announced measures where the government has promised to cover 80% of salaries up to £2500 per month for all employees while Andrew Bailey in his first week as the Governor of the Bank of England at an emergency meeting cut rates to 0.1%.
The dollar still reigns as king of currencies in times of turmoil, while the Japanese yen offered investors an alternative safe haven. Sterling has slumped sharply this and is trading at levels not seen since 1985.
Cryptocurrencies have regained some ground since the March 12th sell-off which was driven due to a combination of a market systemic risk which led to panic selling and short term holders liquidating their positions. Since then bitcoin has managed to climb to a region of $6000 from a low of $3870.
Of course, the coronavirus pandemic will remain the centre of attention this week, as investors, policymakers, and the general public continue to monitor the spread of the virus, whether the curve of infection begins to flatten and the economic impact of the lockdowns implemented to try and control the virus.
12.30pm – US Chicago Fed Index (February). Markets to watch: USD crosses
8.15am – 9am – French, German, eurozone mfg & services PMIs (March, flash): these are expected to show dramatic declines as the coronavirus hits economies. Markets to watch: eurozone indices, EUR crosses
9.30am – UK mfg & services PMI (March, flash): substantial declines are expected here. Markets to watch: GBP crosses
1.45pm – US services & mfg PMI (March, flash): these are likely to decline sharply as the US economy reacts to the coronavirus. Markets to watch: USD crosses
2pm – US new home sales (February). Markets to watch: USD crosses
9am – German IFO business climate index (March, final): forecast to fall to 88 from 96. Markets to watch: EUR crosses
9.30am – UK CPI (February): CPI to rise 1.5%. Markets to watch: GBP crosses
12.30pm – US durable goods orders (February): expected to fall 0.9% MoM. Markets to watch: USD crosses
3.30pm – US EIA crude inventories (w/e 20 March). Markets to watch: Brent, WTI
12pm – BoE rate decision: no change expected given the surprise cut last week. Markets to watch: GBP crosses
12.30pm – US GDP (Q4, final). Markets to watch: USD crosses
12.30pm – US personal income & spending (February): spending to rise 0.3% MoM. Markets to watch: USD crosses
2pm – US Michigan consumer confidence (March, final). Markets to watch: USD crosses