Mar 27 2020 1
USA just rose to the top of the world in terms of coronavirus positive cases. There are more news that we should follow to choose the right trading strategies. Let's check them out.
A wall in China
China has vowed to block nearly all foreigners starting Saturday. This is considered to be an acknowledgment that most of the new coronavirus infections come from abroad. Yesterday, the Foreign Ministry said foreign visitors would not be allowed to enter even if they have a valid visa and work permit. However, the order does not include diplomats and those who come to China to "engage in necessary economic, commercial, scientific and technological activities or for urgent humanitarian needs."
The move is similar to travel bans imposed by many other countries that China has once protested. This decision was made when the United States surpassed China in the number of virus infections in the world, with more than 82,400 reports.
Global risk assets are likely to rise sharply on Friday in Asia as investors bet that the massive fiscal and monetary responses to the coronavirus crisis will lessen the economic impact of it. The S&P 500 index rose more than 6% in the series for the first three consecutive days since February. Meanwhile, the dollar slumped for the third day. The futures market in Japan, Hong Kong and Australia all increased more than 3%. The MSCI All Country World Index is continuing its upward trend of 13% this week. Treasury bonds rose higher, while crude oil fell.
The data is beginning to show the level of economic losses of the outbreak - the US unemployment report rose to a record 3.28 million the week before all businesses closed to prevent the spread. of the virus. US government aid can help reduce the impact on workers and businesses.
Yesterday, leaders of the 20-nation Group said they injected more than $5 trillion into the global economy and pledged to do whatever "necessary" it needs to overcome the coronavirus pandemic. as the collapse it caused. The G-20 leader from Saudi Arabia unexpectedly convened the Summit with the participation of leaders from member countries and including representatives of international organizations such as the United Nations. A general statement after the meeting was: "This virus does not respect any borders." The coordination of nations in the G-20 will contribute to action to stabilize the global economy during the financial crisis.
"We will continue to provide stronger and larger scale financial support. The extent and scope of this response will bring the global economy back to a stable state," the leaders said. create a solid basis for job protection and growth recovery." However, there is another problem that is not really mentioned in the joint statement and must be a shortcoming: the oil shock caused by the price war between Saudi Arabia and Russia.
Getting back on track
It's been a week since the Australian central bank bought government bonds to lower interest rates across the economy and the original ruling was: so far it's fine. The Reserve Bank of Australia has bought $18 billion of securities ($10.7 billion) since last Friday, after setting a target for a 3-year government bond yield of 0.25%, same as the cash rate. That yield was under control in the target, while signs of tensions in the money market were easing.
Martin Whetton, head of bond and interest strategy at Commonwealth Bank of Australia, said: "By buying bonds, RBA is having a bifocal stock at the moment: one is to return order to the market and one is to reduce the cost of borrowing in the economy through controlling the yield curve. "A good start when the initial announcement brought yields on 3-year bonds to a target of 0.25%. The 10-year yield gap has nearly halved compared to last year's six-year peak and the gap between the 3-month bank draft interest rate and the overnight swap rate - a key measure. on how banks can easily raise capital - has come back to a 5-year average.