Global Markets and Commodities

Global Markets and Commodities

$GLD $XAU $OIL $USO $USD $MSCI

Crude Oil and global equity markets bounced back after the Monday’s losses as the world’s biggest economies moved to cushion the impact of the coronavirus, but stock gains in Europe failed to hold as investors are still cautious.

The price of Brent Crude Oil climbed 10% on hopes a supply cut deal could be rescued and most benchmark government bond yields rose from record lows as governments outlined broad measures to confront the epidemic’s economic and human toll.

Japan unveiled a second package of measures worth about $4-B in spending, focusing on support to small and mid-sized firms.

MSCI’s gauge of stocks across the globe gained 2.55%, but the pan-European STOXX 600 index lost 1.14%, after initially trading higher.

A jump in virus infections in Italy, Germany and Britain unsettled investors.

The major European indices remained in Bear territory.

The FTSE 100 in London almost eked out a gain but closed down 0.1% as Oil companies rebounded as Saudi Arabia and Russia engaged in a price war.

Yields on benchmark US 10-yr T-Note more than 2X’d to 0.801% and those on German Bunds jumped around 20 bpts at 1 point as investors shed some safe-haven holdings.

Strategists and economists expect the Fed to cut US interest rates to Zero as part of a global move to provide strength and liquidity to the financial system.

USD rallied against the safe-haven JPY and CHF, though analysts said it was too early to predict a floor.

Stocks in Asia rebounded, with Japan’s Nikkei closing up 0.85% after touching its lowest level since April 2017.

China’s benchmark Shanghai Composite Index traded 1.8% higher as new domestic coronavirus cases fell and President Xi Jinping’s visit to the epicenter of the epidemic lifted sentiment.

The Crude Oil rally had the most power. About 50% of its losses from Monday were recovered, offering hope that markets had found a floor despite the fragile sentiment.

Russia’s Oil Minister Alexander Novak said he did not rule out joint measures with OPEC to stabilize the market.

Brent Crude Oil futures rose 8.3% to settle at 37.22 bbl.

WTI Crude Oil gained 10.4% to settle at 34.36.

Gold prices fell 1%, retreating from the prior session’s rise above the Key 1,700 resistance mark, as safe-haven demand faded some.

US gold futures settled down 0.9% to 1,660.30 oz.

The bond market has priced in a global recession of unknown length.

Investors are fully pricing an easing of at least 75 bpts at the next FOMC meeting on 18 March. A cut to near Zero is seen by April.

Yields on 10-yr US T-Note dipped to 0.318% Monday climbed back to 0.6787% on Tuesday on the White House stimulus talk.

Stay tuned…

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