The main news last week was when the US announced a $2 trillion support package for the US economy. This resulted in the largest move up in the Dow Jones since records began as it recorded more than an 11% rise on Tuesday of last week. The S&P500 had not made two up days all month, but the relief from the US rescue package prompted back-to-back gains for the S&P500 midweek. However, the COVID-19 crisis is far from over. With more than 500K cases worldwide we can expect further sellers in global stocks this week and elevated ranges. Manage risk accordingly.

Key events from the past week

  • USD: US Economic Bill Agreed, Tuesday, March 24. The US stimulus deal agreed last week is due to provide over $2 trillion in stimulus. The bill provides more than $130bln in aid to hospitals and $150bln to support state and local governments.
  • USD: Federal Reserve Announces QE, Monday, March 23. The Federal Reserve launched a limitless QE programme on Monday purchasing $75billion of treasuries each day last week. This move by the Federal Reserve resulted in Dollar weakness which had been very strong into the end of the previous week.
  • COVID19: Spreading continues, Thursday, March 24. Intense focus remains on the spread of the coronavirus. Fundamentally, the market is selling off due to a medical issue. Therefore, if COVID-19 spreads more severely, expect risk-off tones to return into this week.

Key events for the coming week

  • USD: Dollar resurgence? With the USD the most liquid currency, if equity markets sell off this week, expect more USD buyers to return. In times of severe distress, as we are having now, the USD can act as a safe haven currency alongside the JPY and the CHF.
  • USD: Unemployment rate, Friday, April 03. The expectations are that US unemployment will be deeply impacted by COVID-19. Investors will be carefully watching this release for signs of high unemployment in the US.
  • Coronavirus: Watch out for the latest virus news. The impact of the coronavirus is probably now around three to four weeks away from its peak impact. The issue for this week will be whether the stimulus packages released around the world can support equity markets or whether COVID-19 will prompt a fresh wave of equity selling.