(20 February 2020)DAILY MARKET BRIEF 1:USD gains post-Fed minutes.

(20 February 2020)DAILY MARKET BRIEF 1:USD gains post-Fed minutes.

20 February 2020, 09:26
Jiming Huang
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The FOMC minutes showed that risks related to global trade and growth were diminished after the signature of the phase-one deal between the US and China, but other risks emerged, including the coronavirus outbreak. The Fed highlighted the need to monitor closely the developments related to the coronavirus, but with economic activity growing at a ‘moderate pace’ and jobs market remaining ‘strong’, the Fed’s policy outlook is ‘likely to remain appropriate for a time’. The Fed plans to curb bill purchases starting from the second quarter. But, the activity on the US sovereign bond market suggests that investors expect at least one more rate cut during the second half of this year.

New trading day, new record highs for the US equities. The S&P500 and Nasdaq hit fresh records on Wednesday on a Fed statement judged supportive and on hope that Chinese efforts to contain the coronavirus spread using information technology, a thing they know how to do, would help limit damages. The IMF insisted that there should be a rebound in global growth this year, despite economic activity being clouded by coronavirus worries.

The US 10-year treasury yield remained near 1.55% and the US dollar index advanced to 99.72 sending the USDJPY above the 111 level for the first time in more than a year.

WTI rallied to $54 a barrel.

Energy and technology stocks led gains in New York. Apple shares (+1.45%) recovered early week losses, Tesla closed 6.88% higher.
Stocks in Asia traded mixed, however. Japanese stocks recorded timid gains on softer yen, the ASX 200 gains were led by energy stocks, Shanghai’s Composite advanced 1.84%% as the People’s Bank of China (PBoC) cut the 1-year Loan Prime Rate (LPR) by 10 basis points to 4.05% and the 5-year LPR by 5 basis points to 4.75%, while Hang Seng (-0.23%) and Kospi (-0.67%) edged lower.

FTSE futures (+0.13%) hint at a positive start in London; recovery in oil prices and a cheaper pound should give a support to the energy-heavy index.

By Ipek Ozkardeskaya


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