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OVERNIGHT MARKET SNAPSHOT FOR WEDNESDAY 4/03/20 (as at 8:15am AEDT)
- SPI200 (Mar) overnight futures down 84 pts to 6284
- SP500 down 88.99 pts to 3001.24
- NASDAQ down 268.07 pts to 8684.09
- Dow Jones down 785.91 pts to 25,917.41
- FTSE100 up 63.31 pts to 6718.20
- DAX30 up 127.52 pts to 11,985.39
- GOLD futures (April Contract) up $41.40 to $1636.20 an ounce
- COPPER futures (Comex May) down $0.009 to $2.586 a pound
- OIL futures US Session (Nymex Apr) up $0.57 to $47.32 a barrel
- CRB Index up 1.43 pts to 164.93
- AUDUSD trading at 0.6595
- EURUSD trading at 1.1180
- GBPUSD trading at 1.2811
- USDJPY trading at 101.1800
- USD Index US Session (ICE March) down 0.226 to 97.093
US Indexes were again back under pressure in a risk off tone after the US Federal Reserve made a surprise interest rate cut in a bid to support the markets and shield the economy from the impact of the virus. Powell and his team decided to cut interest rates by 50 basis points which was initially taken well by investors but many saw the move as a signal that the Fed sees a larger than anticipated blow to the US economy from the virus impacts. Fed Chair Powell also suggested that the threat to the economy would not soon abate and will weigh on economic activity for some time. It was all swings and roundabouts as the SP500 rose as much as 1.5% after the cut was announced before sellers reversed the gains and pushed price to be down around 3%. The Fed is trying to buoy the market with cheaper access to funds although, if history is anything to go by, this may not be the end result. On average, the SP500 has fallen 5.26% in the two weeks prior to non-scheduled cuts while then declining 8.87% on average in the year after with gains in just two out of seven instances. The DOW ended down 2.94% while the broader SP500 was also down 2.88% and the Nasdaq ended down 2.99% for the session. In Europe, major Indexes ended the session higher but closed just after the US rate cuts so expect to see some action once they open later tonight. The DAX index futures gave up the gains to follow the index lower into the close.
The USD Index came under fire after the surprise rate cut to end the session on the lows. The move lower continues the downtrend as the carry trade continues to unwind and US interest rates close the gap with other countries. US bond yields also fell on the news to send bond prices spiking higher. The EURUSD rallied higher to again be a beneficiary of the weakness into the USD with the 1.1240 zone well in its sights. The GBPUSD pushed up off support around the 1.2770 area being helped by the weakness into the dollar. Price was already being supported by the bulls who may now be targeting minor lower highs at 1.2850. The AUDUSD also spiked higher on the USD move. Even though the AUD is linked to China and the impact the virus will have on their economy, there is a lot of sellers built up for a short squeeze which is now playing out. If economic data starts to show weakness in the Chinese economy, and add to that further RBA rate cuts, then expect to see the Aussie back under pressure. The USDJPY resumed its move lower on the dollar weakness and also on the back of the safe haven YEN buying.
SPOT GOLD took off on the back of the rate cut news and kicked into action as the bulls woke up. Price has now pushed back up into the trading zone it was in prior to the big sell off Friday night. Crude Oil reversed some of the previous sessions gains as the USD fell over although the expectations for OPEC to cut production managed to contain the selling and support price. Copper was under pressure right from the start of the Asian session as buyers were happy to lock away some of the recent gains. The move lower accelerated on the rate cut news before buyers again stepped into to support price into the close off key support.
Cryptocurrencies came under some pressure as share markets again went into a risk off tone. Bitcoin is currently trading at $8704.8 down 2.08% while Ethereum is at $223.28 down 3.91% and Ripple is at $0.23397 down 2.49%.
The ASX200 traded the reverse of Mondays session as the Index opened up strong yesterday only to fade into the close to end with minor gains. It seems that many were expecting a 50 basis point rate cut from the RBA rather than 25 which saw some sellers come into the market after the RBA release. At the close the index ended up only 44.2 points to 6435.7. Gains in the IT and Healthcare sectors helped support the action as rising stocks outnumbered declining ones by 937 to 337 and 236 ended unchanged.
The ASX200 is expected to open down 90 points as the SPI200 came under fire overnight as US markets fell apart.
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ECONOMIC DATA OUT TODAY (AEDT)
AUD GDP 11:30am
CNY Caixin Services PMI 12:45pm
EUR German Retail Sales 6pm
EUR Final Services PMI 8pm
GBP Final Services PMI 8:30pm
EUR Retails Sales 9pm
USD ADP Non-Farm Employment Change 12:15am
CAD BOC Overnight Rate and Rate Statement 2am
USD ISM Non-Manufacturing PMI 2am
USD Crude Oil Inventories 2:30am
GBP MPC Member Broadbent Speaks 5am
USD Beige Book 6am
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SPI200 INTRADAY LEVELS TO WATCH
