Daily Market Commentary
US markets closed out the March Quarter, suffering the worst shock since the GFC. US equities suffered the worst losses for a quarter since 1938, but this could have been worse, had we not seen the strong rebound over the last week or so. European markets were bolstered by the economic data from China. Chinese PMI data surprised markets by expanding for the last month, which reflected the fact that it comes of massive lows, after the shutdown the previous month. The PMI data the previous month had shown massive contractions, from the shock of the shutdown, due to the coronavirus outbreak. This month was a refection of the partial re-opening of the economy, so gains off a very low base.
The numbers allowed European markets to book gains in equities, for the final day of the Quarter, reinforcing the strong rebound. The spread of the virus continues but there are signs of stabilisation. Italian increases were lower and US 'social distancing' was showing signs of progress, despite the massive infection rates according to key Government medical expert Tony Fauci. The Fed introduced a massive new scheme, the FIMO Repo Facility, which allows offshore holders of US securities to replenish liquidity. The Fed have replenished resources, from the latest US Government bailout/support package, so there is a lot more to come. Trump has also proposed a massive $2 Trillion infrastructure stimulus package, following the Japanese announcement of their own YEN 60 Trillion package.
US Bond Yields drifted lower and the massively leveraged balance sheet, should ensure monetary conditions forge forth into unchartered territory. The recent gains from the commodity currencies were not sustained, with the AUD slipping to 0.6130, while the NZD plunged to 0.5950! NZ Business Confidence numbers were incomplete and not reliable, under the circumstances, but collapsed to minus 63.5!
The control and containment of the pandemic, remains key to the size and scope of the economic recovery, in global markets.
Paul Bettany
Collinson Forex
Collinson & Co
Mobile 0406-744-923