Market Report 9th April 2020

Market Report 9th April 2020 981 980 Realm
U.S. stocks closed up on Wednesday. Europe higher this morning.
  • European stocks fell after Spain’s daily toll of coronavirus deaths rose for the first time in five days and the death toll surpassed 10,000 in France.  
  • US stocks moved sharply higher over the course of the trading day on Wednesday after fluctuating early in the session. With the rally on the day, the major averages ended the session at their best closing levels in nearly a month.
  • Asian stocks ended a choppy session on a mixed note as uncertainty lingered despite signs of a flattening coronavirus infection curve.

Global Macro

  • The Fed expects the economic activity to decline in the coming quarter due to the coronavirus outbreak and noted that the timing of the resumption will depend on the containment measures put in place, the success of those measures, and on the responses of other policies, including fiscal policy, minutes from last FOMC meeting on March 15th showed. Policymakers also see an extremely large degree of uncertainty regarding how long and severe such a decline in activity would be. The Fed also expects the fed funds rate to remain at 0-0.25% until the economy has overcome recent events. On March 15th, the Fed lowered the target range for its federal funds rate by 100bps to 0-0.25% and launched a massive $700 billion quantitative easing program during an emergency move.
  • Mortgage applications in the United States declined 17.9% in the week ended April 3rd of 2020, following a 15.3% rise in the previous week, data from the Mortgage Bankers Association showed. Refinance applications dropped 19.4% and applications to purchase a home fell 12.2%, the lowest since 2015. Meantime, the average fixed 30-year mortgage rate increased 2bps to 3.49%.
  • Global automakers reeling from the COVID-19 pandemic are accelerating efforts to restart factories from Wuhan to Maranello to Michigan, using safety protocols developed for China and U.S. ventilator production operations launched in recent weeks. Auto manufacturers and suppliers are converging on a consensus that temperature screening, daily health questionnaires, assembly lines redesigned to keep workers 3 to 6 feet (0.9 m to 1.8 m) apart, and lots and lots of masks and gloves can enable large-scale factories to operate safely.
  • Oil prices surged on Wednesday before giving up most early gains, amid ongoing uncertainty over an OPEC+ agreement on production cuts. Saudi Arabia and Russia have signalled their willingness to agree in deep curbs, but only if the United States and other oil-exporting countries join in to help balance the market. The US Department of Energy said on Tuesday US output was declining, but Moscow has already rejected that a market-driven fall in production could count towards the country’s share of a potential global oil reduction deal. Meantime, EIA data showed crude inventories in the US rose to a record high of 15.177 million barrels in the latest week, highlighting a collapse in demand due to the coronavirus outbreak. US crude has been hovering around $24 per barrel on Wednesday afternoon.

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