Apr 22 2020 0
Markets around the world are getting more and more chaotic since the news yesterday. Let's check how the world is dealing with that problems and choose for ourselves the best trading strategies.
Going down
The risk-off sentiment from Wall Street is likely to flood into Asia today, after US stocks fell and Treasury Bonds escalated amid turbulence in the energy market. The futures markets in Japan, Hong Kong and Australia all fell. The S&P 500 index dropped more than 3% yesterday as investors were less concerned about an agreement the White House and congressional leaders reached on a new spending package to counteract the impact of the pandemic. Meanwhile, the income statement of businesses causes a multiplication of disasters.
Pain from oil
Oil prices are collapsing more and more seriously. Just one day after the US crude oil futures contract in May for the first time fell below zero, June futures contracts fell 43%, to close below $12/barrel in New York. A huge supply caused by the pandemic and a shortage of storage space around the world has changed the entire forward curve for oil. The crisis spread throughout the global oil markets has caused dozens of people to lose their jobs and freeze billions of dollars in capital spending, as well as threaten to paralyze the world's economies which are reeling amidst blockade orders due to the coronavirus pandemic. Storage tanks, pipelines and tankers have become overwhelmed by an oversupply due to a sharp drop in global fuel demand. Pierre Andurand, founder of Andurand Capital Management, said: "This is a dangerous market to trade at this time. The market needs oil production to drop immediately for prices to recover."
Global situations
Cases of coronavirus infections have increased by 5.7% in the US, the biggest leap since April 10, just as President Donald Trump said he supported a bill that would provide money for testing and illness. Institute (the US has approved the first home test kit for Covid-19). Meanwhile, the UK will begin testing the vaccine in humans on Thursday. Singapore has reported more than 1,000 cases for the second day in a row and will extend a partial blockade in the next 4 weeks; The city government is also redeploying workers to adjust to the needs of the new epidemic era when some jobs become redundant and others increase demand.
Italy has finally received good news - for the first time the number of recovery cases has almost surpassed new infections. As for Germany, they reported the least increase in infections this month. However, Munich's Oktoberfest was canceled for the first time since World War II - a sign that life would not return to normal in the coming months - and the bullfighting festival in Spain. Houses are also delayed. In India, scientists suggest that a herd immunity strategy could defeat the virus in younger people and could be a solution for poor, mostly young populations. Around the world, the number of coronavirus infections has reached 2.5 million and the current number of deaths exceeds 175,000.
Scale down
The central bank of Australia is adjusting its monetary policy: now its bond buying program has lowered interest rates across the economy. Since March 20, when the program began, the Reserve Bank of Australia (RBA) has purchased more than 47 billion AUD ($29.7 billion) in bonds from the federal and state governments. At first, RBA bought up to 5 billion Australian dollars per day, but recently the speed has dropped to 1/10 of that level. This result is an early evidence of the central bank's decision to choose to control yield curves instead of choosing to quantify a certain number of purchases. The RBA also sought to calm the government bond market amidst the instability of the pandemic and has since stabilized somewhat. The main measure of monetary market stress has dropped to its lowest level since 2007 after the RBA began buying debt papers, a large amount of daily liquidity and lend Australian banks $90 billion.
