As world leaders rushed to prop up panicked global markets and inject liquidity into the financial system. On Thursday, the market panic mood temporarily eased, the U.S. stock market ended strong, the dollar remained the dominant position, closed higher across the board, the U.S. index was more than 103 on Friday. U.S. crude jumped 25% on Thursday, its biggest one-day gain on record, before extending its rally in after-hours trading, rising 35%.
For the current market and major asset performance, FXTM research analyst Lukman Otunuga wrote a brief analysis of the following:
On Thursday, the bazooka of central Banks eased some concerns about the outbreak of the coronavirus and the global economy, and financial markets temporarily returned to stability.
The European central bank went all out with a massive €750bn emergency purchase programme (PEPP) to stabilize markets and help the eurozone economy.
Meanwhile, the reserve bank of Australia (RBA) cut its official interest rate to a record low of 0.25 percent to ease the impact of the coronavirus pandemic on the economy and will launch the first-ever quantitative easing measures. South Africa’s central bank also pulled the monetary trigger, cutting the repo rate by 1 percent to 5.25 percent.
Even in the UK, the bank of England cut interest rates to 0.1 percent, the second emergency cut triggered by a coronavirus, sparking market turmoil.
Repeated interventions by Central banks around the world could provide a temporary lifeline for equity markets.
However, concerns over the coronavirus and how much impact it will have on global growth should limit investors’ appetite for riskier assets.
The s&p 500 tried to stabilize above 2,400 on Thursday.
An improvement in sentiment could push the index toward 2,500 in the short term. If the market wakes up today in the wrong direction, prices could fall back below 2,350.
As the central bank continued to intervene, oil prices jumped more than 20%
Oil prices rallied sharply on Thursday, rebounding from their lowest level in two decades, as investors digested measures by Central banks and governments to support economic growth.
Us WTI crude prices have risen more than 20 percent from multi-year lows and are likely to continue to rise in the short term in hopes of stimulating the economy.
While a technical rebound is imminent, fundamentals still favor bears.
As long as demand concerns and concerns about oversupply remain dominant themes, oil prices will weaken further.
From a technical point of view, us crude could rebound to $30 in the short term, and then the bears will come back in.
The euro/dollar is like a stone thrown into the sea, with no real bottom.
The euro weakened against all the G10 currencies, falling more than 2 percent against the dollar despite a “big bazooka” from the European central bank.
On the daily chart, the euro is heavily bearish as highs and lows continue to move lower. The daily close is firmly below 1.0650, which should open the door for a fall to 1.0580.