Daily market review

United States

A move by the Federal Reserve to buy Treasuries and mortgage-backed securities "as needed" failed to hold back the rout underway in the stock markets. The Dow fell 3.0 percent with the year-to-date loss now 27.1 percent. The Nasdaq bucked Monday's trend, posting only a 0.3 percent loss.

The Fed's move, which also includes credit backstops for both consumers and businesses, follows its announcement last week that it would buy $500 billion in Treasuries and $200 billion in mortgage-backed securities. The Fed's balance sheet was already climbing sharply before today's news, up a weekly $350 billion in data published last week to nearly $4.7 trillion.

Offsetting the central bank's move was continued inaction on the fiscal side as the US Senate over the weekend voted down the Trump Administration's $2 trillion stimulus plan. Negotiations were continuing when the markets closed Monday. Treasury Secretary Steven Mnuchin, citing proposed bridge loans, urged small businesses not to layoff workers.

Amazon, up 3.1 percent, has reportedly been approached by the UK to deliver virus tests to the country's health workers. Shares of drugstore chain CVS fell 2.9 percent despite the company's plans to expand its workforce by 50,000.

Pending US data later in the week include initial jobless claims which are expected to surge, from 281,000 in the prior week to as much as 1 million or more. Goldman Sachs said it expects global GDP to plummet 24 percent in the second quarter.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 42 cents to US$27.19, while gold surged US$79.50 to US$1,654.10. The US dollar rose against major currencies. The US Treasury 30-year bond yield fell 8 basis points to 1.35 percent while the 10-year note yield fell 9 basis points to 0.76 percent.


The coronavirus continues to sweep European markets lower with Greece the latest to lock down and with Italy, where infections of health workers now total 4,800, locking down even tighter.

The UK's FTSE lost 3.8 percent on the day with France's CAC down 3.3 percent and Germany's DAX down 2.1 percent. The Swiss Market Index, year-to-date, is down 23.1 which includes Monday's 5.4 percent drop. Italy's FTSE MIB fell 1.1 percent for a year-to-date decline of 33.8 percent.

Metalworkers in Lombardy said they will strike on Wednesday to ask for stricter anti-virus measures. Shares of Airbus, where shutdowns were reported last week, fell 9 percent after the aircraft maker withdrew both its forecasts as well as a proposed dividend.

Two oil companies posted gains: Total, up nearly 13 percent is cutting costs and suspending share buybacks as is Royal Dutch Shell, which rose 7 percent. Travel companies and recreation companies were once again heavily sold.

Consumer confidence has fallen sharply this month, to minus 13 for the EC Commission's index to minus 11.1 and a 4-1/2 year low. Only 15 percent of the responses were collected this month due to strict confinement measures in individual countries.

Asia Pacific

Most major Asian markets opened the trading week with sharp falls Monday after Friday's declines on Wall Street and generally negative virus news. Authorities in Australia, New Zealand and India have introduced stricter lockdown rules, while additional travel restrictions have been imposed in the region. The further escalation of the pandemic in Europe and the US Senate's vote against the Trump administration's proposed stimulus package over the weekend also weighed on investor sentiment.

India's Sensex index was the worst performer in the region Monday, closing down 13.2 percent, while Singapore's STI index dropped 7.4 percent after the first fatalities there were recorded over the weekend.

Australia's All Ordinaries index also fell heavily again, down 6.0 percent, as additional fiscal support announced by the government over the weekend had only a limited impact on sentiment. Hong Kong's Hang Seng index closed down 4.9 percent, while the Shanghai Composite index fell 3.1 percent. Japanese markets were the exception to the regional trend, with the Nikkei and Topix indices advancing 2.0 percent and 0.7 percent respectively after the International Olympic Committee said the 2020 games may be postponed.

Singapore's consumer price index advanced 0.3 percent on the year in February, slowing from 0.8 percent in January. Recreation and culture prices fell 1.5 percent on the year likely reflecting the impact of curbs on social and community activities in response to the virus. Hong Kong's consumer price index increased 2.2 percent on the year in February, picking up from 1.4 percent in January, though underlying inflation slowed from 3.7 percent to 2.5 percent.

Looking ahead*

Flash PMIs for March, in what will offer early indications on the unfolding impact of the coronavirus, open with Japan in Asia followed in Europe by France, Germany, the Eurozone, and the UK; with the US to follow.

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