(16 March 2020)DAILY MARKET BRIEF 1:Equities smashed despite surprise Fed cut to zero.

On Friday, US President Donald Trump declared a national state of emergency and today, the Federal Reserve (Fed) slashed its interest rates near zero in a second surprise action less than two weeks after it cut its rates by 50-basis-point in an unscheduled move. The Fed also pledged to boost bond purchases by $700 billion to provide the necessary support to the US economy for fighting the negative implications of the coronavirus pandemic.

Meanwhile, the Bank of Japan (BoJ) rescheduled its March 18-19 meeting to this morning, where it kept interest rates unchanged but doubled the ETF buying from 6 to 12 trillion yen, increased the upper limit of commercial paper (CP) and corporate bond purchases and introduced a new tool allowing corporate debt to be used as collateral for new loans at zero interest with a year maturity.

The Reserve Bank of New Zealand (RBNZ) lowered its rate by 75 basis points to 0.25% in an emergency meeting as well.

But US equity futures tumbled to their daily trading limit, yet again, after having closed near 10% higher on Friday.

By Ipek Ozkardeskaya