Crude oil prices jumped by 23% on Thursday, posting a historic U-turn from their multi-year low. Furthermore, the global stock markets and the US futures are also bouncing back from recent steep losses on hopes that the global stimulus packages will ease the economic impact from the pandemic. The risk-on mood was also supported on reports from China that there were no new infection cases in Hubei, the epicenter of the country’s coronavirus outbreak.

 

Coronavirus Update:

Global cases: At least 209,839, according to the latest figures from the World Health Organization

Global deaths: At least 8,778, according to the latest figures from the WHO

 

Market Reaction:

US stock markets settled higher on Thursday, with the Dow Jones index finishing the day at 20,087.19 or 1% up and S&P 500 at 2,409.39, +0.5%. Both indices were supported from the 6% rally in the energy stocks amid the 23% jump in crude oil prices. Meanwhile the Nasdaq index outperformed with a 2.3% surge to 7,150.58 on strong gains from the tech and health sectors.

Fig 1, Dow Jones index, 2-hour chart

The Dow futures extending the overnight gains by another 2% in early Friday’s session, pricing near 20.300 points on improved risk sentiment. Asian-Pacific markets also moved in green this morning, with S.Korean Kospi index surging by 7% while the Chinese CSI 300 moved up by 2%.

 

Crude Oil:

Thursday was a historic day for the crude oil market as the prices jumped by 23% posting their best day ever. The oil prices managed to make a remarkable U-turn rally from their multi-year low recovering almost all the steep losses from the previews day. The rally was supported from the willingness of the US administration to buy significant amount of crude oil to top up the nation’s reserves and to also to support the US Shale drillers from the falling oil prices.

Fig 2, WTI crude oil, 2-hour chart

The WTI oil price gained 23.8% last night or $4.85, to settle at $25.22 per barrel, while the Brent crude rose 14.4%, or $3.59, to settle at $28.47 per barrel. Both oil prices continued to climb even higher during Friday’s morning session, reaching intraday highs of $28 and $30 per barrel. Thursday’s jump came a day after both WTI and Brent dropped 24% to settle at a 18-year low near $20 and $24 on global recession fears, lower oil demand and supply glut.

 

Forex Market:

The US dollar was the strongest currency across the board yesterday on safe-haven demand. The dollar index climbed to 103, to its highest level since 2017.

The Euro currency was under pressure yesterday, falling to a 3 year low against the US dollar. The pair fell to 1.0653 lows on weaker economic data from Eurozone and the stronger US dollar.

The Bank of England cut its key interest rate to 0.1% from 0.25% on Thursday to support the local economy from the pandemic.

Fig 3, GBP/USD pair

 

Monthly chart:

The pound sterling rebounded by 1% at 1.172 this morning after it dropped near 35 years lows yesterday of 1.14. The pair have lost the remarkable amount of 2.000 pips since the start of the year.

 

Economic Calendar for March 20, 2020:

 

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Vrasidas Neofytou

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