Spreadex Market Update
Morning Market Comment 25.03.20
Lacking the same intensity as Tuesday – which is fair; that session was the best since 2008 – the markets nevertheless continued to rebound on Wednesday as US politicians finally reached an agreement on a stimulus plan.
The package, totalling $2 trillion, should be passed today, and was exactly what investors were looking for after days of intransigence by both Republicans and Democrats.
In response the FTSE added another 3.3%, crossing 5550 for the first time in 10 days. It is worth noting that as recent as Monday it had fallen below 5000. The DAX, up 400 points, struck a near 2-week peak of 10000, while the CAC, rising 3.6%, hit 4350. Looking further ahead and the Dow Jones is eyeing a 530 point increase, one that would push the index to 21200 – a near 3000 point improvement on Monday’s lows.
The only worry is, if the measures announced in the last few days – that is, the Fed’s unlimited QE and this $2 trillion plan – don’t create a sustained rebound, it is unclear what will. There are always the plans the G7 hinted at on Tuesday, though given the level of international co-operation required for that, who knows when they will materialise.
As for the day’s agenda, this morning sees the UK inflation reading for February, one that is set to come in at 1.6% against January’s 1.8%. Whether the pound will pay attention or not is a different question entirely; currently it is up 1% against the dollar and 0.6% against the euro, continuing its own rebound.
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