Morning Minutes 3/18/2020

Morning Minutes

Falling Oil Drags Down Stocks As Investors Await Stimulus Packages

March 18, 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

The series of large swings in the markets we’ve seen lately has continued overnight. US index futures hit limit down again overnight with Dow Futures back retesting the 20,000 level after an 821-point, 3.9% decline erased much of yesterday’s 1,048-point, 5.2% gain.

Overseas declines have varied. Australia had the largest decline falling 6.4%, dragged lower by an 8.9% drop in WTI crude oil below $25.00/bbl to its lowest level since 2003. While the supply war continues between OPEC, Russia and others, demand expectations continue to decline with air and other travel being curtailed. Most of the other overseas markets have seen declines varying between 1.8% for Tokyo and Shanghai, 3.3% for Milan, and around 5.0% or Frankfurt and London.

Overnight economic news, meanwhile, has been neutral to positive. US February housing starts beat expectations (1.59M vs street 1.50M). Fiscal stimulus packages are on the way for the US and Canada. The Fed meeting wraps up today, with two recent surprise announcements more stimulus appears unlikely, but we may get more commentary on the state of the economy and member forecasts on GDP, inflation and interest rates could attract attention. Based on this, the current forces driving markets sharply upward and downward appear to be an internal battle between liquidators (forced selling from margin calls and redemptions), and bargain hunters.

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