Morning Minutes 3/23/2020

Morning Minutes

Stock Markets Rebound on Increased Fed Support

March 23, 2020

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

Stock markets have rallied in the last few minutes on a surprise stimulus/support announcement from the Fed this morning that it will purchase as much assets as are “needed to support smooth market functioning”, a strong signal that the central bank intends to ease the capital crunch that had unfolded in some markets over the last few days. The Fed is also rolling out more lending programs for businesses and has added commercial mortgage backed securities to is shopping list. This news came at a particularly welcome time for investors as one of the factors that had been depressing world markets overnight was ongoing infighting among US politicians over fiscal support for the economy.

The upward reversal has been quite substantial. Dow futures are currently up 3.0% or about 550 points somewhere near 19,580 having dropped back from a recent high near 19,800. When I started writing today’s Morning Minutes, Dow futures were down 3.5% or about 650 points near 18,380 and had already partially clawed their way back from an overnight low near 18,100. Similarly, NASDAQ futures are now up about 3.2% and have regained the 7,000 level after being down 2.7% previously. European markets are now also up strong with the Dax flipping from a 3.3% loss to a 0.5% gain.

Today’s Fed news has also sparked strong reversals in other markets. The US Dollar, for example, had been climbing against other currencies earlier in the morning but has since reversed course and is now down 2.3% against Gold, which has regained $1,500/oz. Trading against other majors has been mixed with the greenback losing ground to the Yen and Euro while still up against the Loonie and the Pound.

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