The Wednesday market minute
- Global stocks mixed, with investors reacting to the surprise Fed rate cut on Tuesday and turning to regional central banks to do the same.
- Coronavirus infections outside of China continue to increase, although most of the new cases are limited to Italy, Iran and South Korea.
- Joe Biden wins at least 9 states in the Super Tuesday election, including Texas, relaunching the presidential campaign of moderate Democratic candidates, while Bernie Sanders has a narrow lead in California.
- Benchmark 10-year US Treasury bond yields hit a historic low of 0.906% in overnight transactions, while futures prices suggest a 63% probability of a rate cut in June, while the markets are betting on a further easing of the Fed.
- The world price of oil adds to recent gains as OPEC reflects on a million more barrels per day of production cuts.
- US equity futures suggest a sharp rise in the opening bell on Wall Street on Wednesday, although market volatility indicators remain high, ahead of weekly employment data at 8:15 a.m. EST.
US equity futures surged on Wednesday, although markets around the world remained volatile as investors revalued risky assets following the surprise cut in interest rates by the Federal Reserve and the evolution of the economic impact of the coronavirus.
However, early gains have been curtailed after a report by Italian newspaper La Republicca that the government would close all schools and universities across the country until at least mid-March, as authorities try to stem the spread the most serious coronavirus in Europe, where infections have exceeded 2,500 and 79 people have died.
The unforeseen cut of 50 basis points from the Fed, the first emergency measure since the depths of the financial crisis in 2008, provided brief support to global stocks, but ultimately raised deeper concerns related to both the spread of the virus, which has now reached 60 countries and at least 94,000 people, and its impact on the global economy.
“We come to the conclusion that it is time to act to support the economy,” Powell told reporters on Tuesday. “I know the US economy is strong and we will go to the other side; I expect we will also find solid growth and a solid job market. “
Fed front movement leads investors to seek follow-up action from other central banks, including ECB and Bank of Japan, in the coming weeks, as US bond markets suggest investors are looking for also another move by Powell and colleagues, with futures prices in a 63% probability of another rate cut in June.
Benchmark 10-year Treasury bills traded at an all-time low of 0.906% overnight, before falling to 1.007% later in the session as equity markets rallied surprisingly on performance strong Tuesday’s vote Tuesday by moderate Democratic candidate Joe Biden.
Biden’s transportation of at least nine of the sixteen state races, including Texas, as well as strong clues in California and elsewhere, helped boost the future of Wall Street during the first trading hours in Europe.
Dow Jones Industrial Average Contracts Indicate 610 Point Opening Bell Gain After 800 Point Drop Last Night, While S&P 500 Contracts Suggest 57 Point Lead For Benchmark wider, which is now down about 7% since the start of the year.
World oil prices have also been significantly higher, following reports that a committee of OPEC advisers recommends cartel members reduce oil production by a million more barrels a day when ‘They will meet later this week in Vienna, a move that would collectively reduce production. – including commitments from Russia and voluntary reductions from Saudi Arabia – to around 3.1 million barrels per day.
Brent crude futures for May delivery, the world benchmark, were last seen 62 cents higher than their Tuesday closing in New York and trading at $ 52.48 per barrel, while WTI contracts for April were 58 higher at $ 47.76 per barrel.
European stocks have been volatile as trades started in Frankfurt and London, with investors still assessing potential moves from regional central banks and keeping an eye out for market volatility indicators such as the CBOE VIX index, which hit a multi-year high of 36.82 points yesterday. as the Dow Jones hovered nearly 1,000 points between the G-7’s statement of unconditional support and the drop in the Fed’s emergency rates.
The Stoxx 600 benchmark was seen 1.4% higher Wednesday at midday, with a gain of 1.38% for the DAX performance index in Germany, while the British FTSE 100 was at 1.55% on the rise during the first London transactions.
Overnight in Asia, a planned stimulus package of about $ 9.8 billion from South Korea, where the region’s fastest-growing cornoavirus, helped KOSPI increase by 2 , 24% in Seoul, while equities in China recorded modest gains even if the data confirmed a fall in February in service sector activity in the world’s second largest economy.
The Nikkei 225 from Japan closed the session down 0.08% as the yen remained at 107.40 against the US dollar, while the MSCI benchmark excluding Japan regionally was in 0.39% increase before the last trading hours.