Last session market review
The previous session’s plunge triggered the fifth circuit breaker in U.S. history, wiping out the dow’s gains since trump took office. Spot gold fell to $1,473.30 an ounce. The us index surged to a high of 101.74; Sterling/dollar low since 1985 1.1448; Crude oil also sold off sharply, falling more than 20 percent at one point.
The rest of the day will focus on U.S. data such as initial jobless claims and current account data, and interest rate decisions from a range of central Banks including the rba and the Swiss national bank.
Fx: eur/usd 1.0912; The pound closed at 1.1617; The Australian dollar closed at 0.5770; Dollar/yen closed at 108.05; Us $1.4502; The dollar was last at 0.9679 Swiss francs.
Commodities: spot gold closed at $1,486.10 an ounce; Comex gold ended at $1,477.90 an ounce; Spot silver settled at $11.94 an ounce; Comex silver closed at $11.772 an ounce; Brent crude closed at $26.69 a barrel; NYMEX crude settled at $20.83 a barrel.
In the currency market
Euro: the euro fell sharply against the dollar for the second day in a row, ending down at 1.0912 as the dollar’s gains intensified. On the technical level, the pivot point of the currency pair is at 1.0919. The initial resistance to the upward movement of the exchange rate is at 1.1037, the further resistance is at 1.1163, and the key resistance is at 1.1281. The initial support of the exchange rate down at 1.0794, further support at 1.0675, more critical support at 1.0550.
Sterling: there was heavy selling against the dollar, with the pair falling for a seventh day, ending down at 1.1617 on Wednesday. On the technical level, the pivot point of the currency pair is 1.1733. The initial resistance to the exchange rate rise is 1.2017, the further resistance is 1.2413, and the more critical resistance is 1.2698. The initial support of the exchange rate down at 1.1336, further support at 1.1052, more critical support at 1.1655.
Yen: dollar/yen closed higher as the dollar rose, closing at 108.05 on Wednesday. Technically, the currency pair’s pivot point is at 107.81, the initial resistance to the exchange rate rise is at 108.88, further resistance at 109.71, and more critical resistance at 110.78. The initial support of the exchange rate down at 106.97, further support at 105.91, more critical support at 105.07.
The stock market
U.S. and European stocks fell sharply Wednesday to their lowest levels since the crisis, as investors worried about the economic damage caused by the new pandemic. The dow jones industrial average fell 1,338.46 points, or 6.3%, to 19,898.92, closing below 20,000 for the first time since February 2017. At one point, the dow was down more than 2,300 points. The s&p 500 fell 5.2% to 2,398.10, nearly 30% below the record set last month. The NASDAQ composite index fell 4.7% to 6,989.84. Indeed, no market was immune to the sell-off, with crude oil falling by the third-largest amount on record.
European stock markets fell on Wednesday despite pledges by western governments to spend billions of dollars to help companies and citizens weather the coronavirus pandemic. The pan-European Stoxx 600 closed down 4 percent, while oil and gas stocks plunged nearly 10 percent, with all sectors and major markets in negative territory.
The bond market
While many welcomed the Trump administration’s efforts to help prevent or ease a recession, Treasury yields rose sharply on Wednesday as traders sold long-term bonds in anticipation of a massive supply of debt that would eventually require the government to auction more treasuries. Long-term Treasury yields rose sharply on Wednesday as investors sold 10-year and 30-year bonds amid talk of a possible $1 trillion federal stimulus package to boost the U.S. economy. The yield on the benchmark 10-year Treasury note rose 12 basis points to 1.226 percent on Wednesday, the highest level since February 28, extending a stunning reversal since Monday, when the yield was just 0.65 percent. On Tuesday, yields jumped 30 basis points as Treasury secretary Steven mnuchin worked with lawmakers to pass a massive stimulus package. The yield on the 30-year Treasury note also rose 11 basis points to 1.684 percent on Wednesday. Bond yields rise as prices fall.
International spot gold rose more than $15 after opening at $1528.29 an ounce in early trading on Wednesday and hit a session high of $1545.90 before retreating slightly from the high. Before the opening bell in Europe, gold’s losses accelerated, falling all the way below the $1,490 mark under a bear rush and nearly $60 off the day’s high before bottling out and recovering slightly above $1,520. As soon as the U.S. opened, the bears again took the offensive, with gold falling more than $45 in the short term to a new session low of $1473.30 an ounce, before settling low to close at $1486.10.
COMEX April gold futures ended down $47.90, or 3.1%, at $1,477.90 an ounce, the lowest close since December 2019.
U.S. WTI crude for April delivery closed down $6.50, or 24 percent, at $20.83 a barrel on Wednesday. Brent may futures fell $3.72, or 12 percent, to $26.69 a barrel on Wednesday. Traders are focused on the huge impact of the new global pandemic on oil demand and plans by Saudi Arabia and Russia to increase production aggressively as they compete for dwindling market share.