The 3Cs - Coronavirus, Crude oil and Credit Risk seem to have shocked the whole world. The infection from the pandemic and the economic fallout is taking a toll on equity markets. Though central banks and the government are pacifying sentiments through rate cuts and liquidity infusion, the fall in the markets is highly disturbing due to the rising confirmed coronavirus cases and deaths in Europe surpassed China on Wednesday, the ECB launched a €750B bond-buying program to stop a pandemic-induced financial rout shredding the eurozone's economy. The new policy brings this year's planned purchases to €1.1T, with the new round alone worth 6% of the bloc's GDP. Eurozone government bonds surged after the decision, with 10-year Italian bond yields dropping as much as 90 bps to 1.40%. Spanish and Portuguese 10-year bond yields slid around 30 bps each, while benchmark 10-year German Bund yields were down 12 bps at 0.35%.
Thursday, March 19, 2020
Wednesday, March 11, 2020
The Price of oil tumbled overnight and could go much lower still.
Global supply disruptions and slackening demand could lead to global recession.
Quarter 1 earnings reports will generally be bad and forward guidance could be even worse.
Expect another rate cut from the Fed and possibly a fiscal stimulus package from Washington, with maybe a short-term rally coming soon.
Further downside in equities appears likely as fear and economic disruptions create global uncertainties.