24 Mar: Stocks heavy, once again, despite Fed move to underpin markets. March PMIs in focus today – they won’t be inspiring.

24 Mar: Stocks heavy, once again, despite Fed move to underpin markets. March PMIs in focus today – they won’t be inspiring.

The global stock rout continued on Monday as the rapidly spreading coronavirus forced more US states into lockdown, eclipsing any optimism from another aggressive policy easing by the Fed, which briefly caused the market to rally by 3% before an equally swift return to the downside, with the US indices ending the session down by around 3%. In order to contain the panic, the Fed said that the purchases of Treasury and mortgage securities that it approved just one week ago will now be essentially unlimited and that it would buy $375 billion in Treasury securities and $250 billion in mortgage securities this week. The Fed also said it would launch three new lending facilities, including the crisis-era Term Asset-Backed Securities Lending Facility, or TALF, which it employed in 2008 to support consumer and business credit markets. It will also lend money to investors to buy securities backed by credit-card loans and other consumer debt. However, any optimism from the move by the Fed was undermined by events in Congress, with traders growing increasingly frustrated at the inability to iron out differences on a nearly-$2-trillion package to support the economy through the current pandemic.

Aside from the volatile ride in stocks, the FX markets were also very choppy but generally not too far removed for 24 hours ago., while the big moves of the day have been seen in the metals, where Gold (+3.8%)and Silver (+4.95%) both rallied strongly.

Looking ahead, Tuesday will look to the flash February PMIs for guidance, which are unlikely to be inspiring but traders will pay particular attention to these as they will be the first global data releases from March and will give an initial reading of how much world manufacturing really has slowed. Other than that it is all fairly thin and the only other pieces of data of any real relevance will be the BOE Minutes and the US Richmond Fed Mfg Index. It will all get lost in the myriad of coronavirus headlines, so stay nimble!

Economic data highlights will include:

Tue: Global Flash Mfg/Services/Composite PMIs (Australia, Japan, EU, UK, US), UK CBI Distributive Trade Survey – Orders, BOE Minutes, US Richmond Fed Mfg Index, New Home Sales, API Weekly Crude Oil Stock Inventory

Market moves, in brief:                          

FX: DXY 102.52 (+0.56%)

Bonds: US10Y; 0.758% (-10.28%), German 10Y; -0.378% (-14.22%), UK 10Y; +0.417% (-25.09%), Australian 10Y; 0.920% (-20.00%), NZ 10Y; 0.969% (-35.00 %), China 10Y; 2.690% (-1.47%)

Stock Indices: DJI; -3.04%, S+P; -2.93%, NASDAQ; -0.27%, EUStoxx50; -2.47%, FTSE100; -3.79%, Shanghai Composite; -3.11%, ASX200: -3.57%

Metals: Gold $1552 oz (+3.57%), Silver $13.23 oz (+4.9%), Copper $2.0845 lb (-4.01%), Iron Ore $88.55 per tonne (NYMEX) (-1.14%),

Oil: WTI $23.73 pb (+1.35%)

CURRENCIES
EURUSD: 1.0723
Res  1.0775  1.0815  1.0855
Sup  1.0700  1.0665  1.0630
USDJPY: 111.19
Res  111.60  111.90  112.20
Sup  110.90  110.55  110.20
GBPUSD: 1.1533
Res  1.1550  1.1590  1.1635
Sup  1.1465  1.1435  1.1400
USDCHF: 0.9845
Res  0.9850  0.9870  0.9890
Sup  0.9815  0.9790  0.9770
AUDUSD: 0.5816
Res  0.5840  0.5905  0.5965
Sup  0.5750  0.5695  0.5640
NZDUSD: 0.5692
Res  0.5725  0.5765  0.5800
Sup  0.5655  0.5625  0.5585
INDICES / COMMODITIES
S&P.fs: 2217.03
Res  2245.00  2325.00  2290.00
Sup  2180.00  2150.00  2120.00
DJ30.fs: 18519.00
Res  18745.00  19060.00  19355.00
Sup  18140.00  17825.00  17490.00
SPI200.fs: 4545
Res  4610  4675  4740
Sup  4485  4425  4370
XAUUSD: 1554.00
Res  1560.00  1580.00  1570.00
Sup  1540.00  1520.00  1530.00
XAGUSD: 13.27
Res  13.30  13.55  13.80
Sup  13.00  12.75  12.50
WTI.fs: 23.78
Res  24.45  25.65  26.95
Sup  22.40  21.40  20.45

The stock markets still look very bearish at end of Monday’s trade and selling any sharp rally once again appears to be the plan. The bounces though can remain vicious – as we saw on Monday – so extreme caution is warranted and gearing levels should be minimal.

The US$ looks set to remain underpinned, with the DXY sitting just below the recent trend high of 102.99, at least in the medium term although the short term charts do hint that we may need a bit of a squeeze to the downside. If so, any decent dip in the dollar should be viewed as a buying opportunity.

On the crosses, Sterling looks heavy, while the Aud$ does look a little more healthy today, although elsewhere, conditions amongst the major pairs look set to be choppy and probably volatile – but rather directionless.

The most interesting chart of the day looks to be in Silver, where a reverse head/shoulder formation seems to be building on the shorter term charts, with a potential measured objective of around 14.50. (See chart below).

EURUSD USDJPY GBPUSD USDCHF AUDUSD NZDUSD
1 Hour Turning Neutral Neutral – Turning Higher? Turning Lower Turning Neutral Turning Neutral Turning Neutral
4 Hour Turning Higher? Possible Topping Formation Turning Neutral Turning Lower? Up Up
1 Day Down Up Down Neutral – Turning Higher? Down Down
1 Week Neutral – Turning Lower? Neutral Turning Lower? Neutral – Turning Higher? Down Turning Lower

 

DXY S+P ASX200 GOLD SILVER OIL_WTI
1 Hour Turning Neutral Turning Neutral Turning Neutral Up Turning Higher? Neutral – Turning Higher?
4 Hour Overbought – Turning Lower? Bullish Divergence Turning Lower? Turning Higher Turning Higher Neutral – Turning Higher?
1 Day Up – Overbought Down – Oversold Down – Oversold Possible Basing Formation Possible Basing Formation Down – Oversold
1 Week Turning Higher? Down Down Turning Lower Neutral – Turning Lower? Down

 

EURJPY EURGBP GBPAUD AUDJPY EURAUD AUDNZD
1 Hour Possible Topping Formation Neutral – Turning Higher? Turning Lower Neutral – Turning Higher? Turning Neutral Turning Neutral
4 Hour Neutral – Turning Higher? Neutral – Turning Higher? Neutral – Turning Lower? Neutral – Turning Higher? Turning Neutral Turning Neutral
1 Day Neutral – Turning Higher? Up Possible Topping Formation Possible Basing Formation Neutral – Turning Lower? Possible Basing Formation
1 Week Neutral Neutral – Turning Higher? Neutral – Turning Higher? Down Up Neutral – Turning Lower?

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