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Market Report 20th February 2020

Market Report 20th February 2020 981 980 Realm

Markets closed higher as fall in new coronavirus cases in China and assurance from the government to tackle the epidemic’s impact on business boosted investor sentiment.

  • European stocks closed in the green on Wednesday, recovering from losses in the previous session as fears over coronavirus outbreak eased after the rate of new infections declined and Chinese factories are set to return to work.
  • US stocks: Following the weakness seen in the previous session, stocks moved mostly higher during trading on Wednesday. With the upward move on the day, the Nasdaq and the S&P 500 reached new record closing highs.
  • Asian stocks ended mostly higher on Wednesday, although the upside remained limited amid renewed worries about the economic impact of the coronavirus outbreak.  

Global Macro

  • The Federal Reserve left the target range for its federal funds rate unchanged at 1.5-1.75 percent on January 29th 2020 as expected, saying the current stance of monetary policy is appropriate to support sustained expansion of economic activity, strong labor market conditions, and inflation returning to the 2 percent objective. The first monetary policy decision from the Fed in 2020 suggests that no changes in the funds rate should be expected during this year, in line with FOMC projections made in December. The Fed also said that overnight repo operations will continue at least through April 2020 to ensure that the supply of reserves remain ample. However, the interest on excess reserves rate (IOER) was raised by 5 basis points to 1.6%, aiming to foster trading in the federal funds market at rates well within the FOMC’s target range. The IOER is usually seen as a guardrail for the funds rate.
  • The Dollar index was rising steady on Wednesday to pass above 99.7, a level not seen since May 2017 as a new round of releases showed US economy remains strong compared to its European and Asia peers and as an appetite for risk rose on easing coronavirus concerns. The data showed today that building permits and housing starts in US are the highest in almost 13 years. Also, the Chinese factories are set to return to work and Beijing is said to consider new stimulus measures like cash injections for airliners and exemptions from pension contributions.

19th February

 

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