Morning Minutes 3/10/2020

Morning Minutes

Stocks Bounce Back on Talk of Fiscal Support

March 10, 2020
8:45 am EDT

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Market Commentary By:
Colin Cieszynski, CFA, CMT
Chief Market Strategist
ccieszynski@siawm.com
+1 (647) 282-4428

Coming off a brutal day that saw the Dow Industrials shed 2,013 points or 7.8% and the S&P/TSX Composite lost 1,660 points or 10.25%, stock markets around the world have been bouncing back overnight and this morning. Dow Futures have been up over 1,000 points at times this morning and currently are up about 650 points or 2.7%. Overseas, European markets are generally in the green but have given back some of their early gains currently rising between 0.1% for Milan, 1.6% for Frankfurt and 2.3% for London. Asia Pacific trading also saw overnight gains led by Sydney bouncing 3.1%, while Hong Kong rose 1.4%, Tokyo gained 0.8% and Seoul moved up 0.4%.

The main reason for the overnight bounce appears to be a sense that yesterday’s big plunge has finally encouraged politicians to start working on fiscal support rather than leaving all the heavy lifting to the central bankers. US President Trump has started talking about a payroll tax cut, but not support for affected industries while Canadian Finance Minister Morneau has been talking about increased health spending and support for affected industries. It’s also possible that forced selling from margin calls may be subsiding and bargain hunting or profit-taking on short sales may be starting.

A trading bounce also appears to be underway in crude oil today with WTI gaining 8.3% to about $33.75/bbl. There haven’t been any signs of movement from Saudi Arabia or Russia on their price war, so this situation could drag on and the market may remain volatile. Natural Gas is up for a second straight day gaining another 3.3%. Copper is up 1.3% as fear about China’s economy subsides with President Xi visiting Hubei Province for the first time since the outbreak started.

Capital has started to ease back out of defensive havens overnight. Bond prices have started to fall and treasury yields have started to bounce back. The US 10-year yield is back up near 0.65% coming up off a test of 0.50%. This has taken some of the pressure off of the US Dollar which is bouncing back against the Euro and the Pound. The Yen remains strong while the Loonie continues to struggle. Gold is dropping back this morning, falling 0.9%.

Video: Market Commentary – March 9, 2020

With Jeremy Fehr – Founder of SIA Wealth Management and SIACharts.com

Click Here to watch a webinar of Jeremy Fehr, CEO of SIACharts, discussing the Neutral zone move in the Equity Action Call and what he is seeing in the markets currently and the impact going forward. A PDF version of the presentation is available. We will record another update if there are changes so please watch for future updates.

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