Wall Street jumps in hopes of a $ 2 trillion boost

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, the United States, on March 20, 2020. REUTERS / Lucas Jackson

(Reuters) – Wall Street jumped out on Tuesday as signals that Washington was approaching an agreement on a $ 2 trillion economic bailout package gave optimism to markets clashing with the biggest sell -off after the global financial crisis.

The Dow Jones Industrial Average .DJI rose 1,130.26 points, or 6.08%, to 19,722.19. The S&P 500 .SPX opened up 107.04 points, or 4.78%, to 2,344.44. The Nasdaq Composite .IXIC gained 335.47 points, or 4.89%, at 7,196.15 at the opening bell.

Reporting of Sagarika Jaisinghani in Bangalore; Editing by Arun Koyyur

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Rebound in Asian equities, the Fed places infinite QE against economic reality

SYDNEY (Reuters) – Asian equities rebounded sharply on Tuesday as the US Federal Reserve’s promise of bottomless dollar funding eased painful tensions in the financial markets, although it could not mitigate the immediate economic blow of the coronavirus.

PHOTO FILE: a currency trader works in front of electronic cards showing the composite stock price index of Korea (KOSPI) and the exchange rate between the US dollar and South Korea won, in Seoul, South Korea , March 23, 2020. REUTERS / Heo Ran

While Wall Street didn’t look impressed, investors in Asia were encouraged enough to raise the E-Mini futures for the S&P 500 by 3% and the Japanese Nikkei by 6.2%. If sustained, it would be the biggest daily growth for Nikkei since late 2016.

MSCI’s broader index of Asia-Pacific equities outside Japan jumped 4.2%, more than halving Monday’s drop. Shanghai blue chips gained 2.7%.

Europe also showed a brighter shadow as EUROSTOXXX 50 futures rose 3.3% and FTSE futures 3.1%.

In its latest drastic step, the Fed offered to buy unlimited quantities of assets on stable markets and expanded its mandate to corporate and muni bonds.

The numbers were certainly large, with analysts estimating that the package could earn $ 4 trillion or more in loans to non-financial corporations.

“This open and heavily enhanced QE program is a very clear signal that the Fed will do whatever it takes to maintain the integrity and liquidity of the Treasury market, asset-backed key markets and other key markets,” said David de Garis. , an economics director at NAB.

The Fed package helped calm nerves in bond markets where two-year Treasury yields hit a low since 2013, while 10-year yields dropped to 0.79%.

Analysts have warned that it would do little to compensate for the short-term economic damage caused by mass blockades and layoffs.

Speculation is mounting Thursday’s data will show that unemployment claims in the United States rose by 1 million last week, with forecasts reaching 4 million.

Goldman Sachs warned that US economic growth could shrink by 24% in the second quarter, two and a half times larger than the previous post-war record.

A series of flash polls on European and American production in March is scheduled for Tuesday and are expected to show deep falls in the recessionary territory.

Surveys from Japan have shown that its service sector has shrunk at the fastest pace recorded in March and the factory’s activity at the fastest pace in about a decade.

HIGH DOLLAR OFF

While governments around the world are launching bigger and bigger fiscal stimulus packages, the latest U.S. effort remains stuck in the Senate as Democrats said it contained too little money for hospitals and not enough limits for funding. big business.

The logjam combined with the Fed’s stimulus spray to take away some shine from the US dollar, although it remains in demand as a global liquidity buffer.

“The special role of the USD in the global financial system – it is used globally in a series of transactions such as commodity prices, issuing bonds and international bank loans – means that USD liquidity has a reward,” he said. CBA economist Joseph Capurso.

“While liquidity is an issue, the USD will remain strong.”

For now, the prospect of massive Fed dollar funding has seen the currency decline to 110.38 yen from Monday’s 111.56 monthly high.

The euro rebounded 0.8% to $ 1.0805, compared to a three-year low of $ 1.0635. The dollar index slipped 0.4% to 101.720 and out of a three-year peak of 102.99.

Currencies linked to commodities and emerging markets that suffered most during the recent divestment of the assets, also benefited from the stable hand of the Fed. The Australian dollar rose 1.5% to $ 0.5915 and away from a minimum of 17 years = $ 0.5510.

Gold rose in the wake of the Fed’s promise of even cheaper money, and rose 1.7% to $ 1,578.45 an ounce after rising from a low of $ 1,484.65 on Monday.

Oil prices also rebounded after recent wild losses, with U.S. crude oil rising by $ 1.09 to $ 24.45 barrels. Brent crude reached 97 cents to $ 28.00.

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Dollar margins rise as investors await fiscal stimulus

FILE PHOTO: an employee counts US dollar bills in a currency exchange office in central Cairo, Egypt on March 20, 2019. REUTERS / Mohamed Abd El Ghany / File Photo

NEW YORK (Reuters) – The dollar gained Monday as investors waited for the U.S. fiscal stimulus to mitigate the impact of corporate arrests designed to stop the spread of coronavirus, even after the Federal Reserve took unprecedented steps. to support the loans.

In a series of actions, the Fed has agreed on historic measures that would see it for the first time supporting corporate bond purchases and direct loans to companies, expanding its business assets as necessary to stabilize financial markets and launching a program soon. to get credit for small and medium-sized businesses.

The dollar fell sharply when measures were announced, but gradually turned back as investors looked to the government for stimulus.

“The only thing we really need to see is that more tax ammunition will emerge,” said Mazen Issa, senior currency strategist at TD Securities in New York. “You have to think of those who are asked to be socially distant and to stay home from work and not to earn a salary and they are taking their time to make them whole. They must speed up.”

A far-reaching economic stimulus package of coronaviruses failed to advance to the United States Senate on Monday as Democrats said it contained too little money for hospitals and not enough restrictions on a fund to help big businesses.

The dollar index against a peer basket = USD fell to 101.64 on the announcement of new Fed support, before returning to trade at 101.53, up 0.03% on the day.

So far the multiple actions of the central bank have so far not been able to stem the strength of the dollar or compensate for the weakness of the shares.

U.S. currency gains were also fueled by a turnaround in dollar positions among hedge funds to a net short from an overall long bet, according to the latest positioning data. This sparked speculation that the dollar rally could be partly explained by the short hedging of traders.

Graph: World FX rates in 2019 here

Additional reports from Saikat Chatterjee in London; Editing by Marguerita Choy and Tom Brown

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The dollar clears losses when equities drop again

LONDON (Reuters) – The US dollar erased initial losses Monday as global bond sales intensified, adding to its secure appeal.

FILE PHOTO: an employee counts US dollar bills in a currency exchange office in central Cairo, Egypt on March 20, 2019. REUTERS / Mohamed Abd El Ghany / File Photo

A 9% dollar rally in the past two weeks ended on Friday after major central banks stepped up their dollar injection structures to cope with a global funding struggle.

But Monday’s trading resulted in a stock market crash, raising concern that central bank stocks were not enough.

“The upshot is that the banking system simply doesn’t have enough dollars to lend to anyone who wants to borrow them … For now, demand for the US dollar appears to be insatiable,” said Marshall Gittler, head of investment research. at the BDSwiss group.

Against a basket of other currencies = USD, the dollar rose 0.2% to 102.82 after falling to 0.7% previously, up nearly 1% from the Asian low. Friday reached its January 2017 high at 102.99.

Also fueling the rise in the dollar was a turnaround in dollar positions among hedge funds to a net short from an overall long bet, according to the latest positioning data. This has raised speculation that the dollar rally could be partly explained by a short hedge by traders.

Washington lawmakers were unable to approve U.S. stimulus measures on Sunday as Republicans and Democrats fought over a proposed $ 1 trillion spending package, fueling concern over dollar earnings, according to analysts that most part of the investors preferred to hold liquidity.

“We went from risk off to a phase where the main players are competing with each other for the security of holding dollars in cash,” said Yukio Ishizuki, FX strategist at Daiwa Securities in Tokyo. “There are still many investors who need to sell riskier assets and want to hold their money in dollars.”

Against the JPY = EBS yen, the US currency rebounded between gains and losses. Last time it was trading 0.6% at 110.07. Against the Swiss franc CHF =, the dollar fell 0.2% to 0.98 francs, as the Swiss central bank maximized foreign exchange intervention after the Brexit referendum in 2016.

The dollar initially rose against the euro EUR = EBS to its highest since April 2017, so it reduced earnings by trading 0.2% less than $ 1.0636 per euro.

The dollar also closed on multi-year highs against Australian AUD = D3 and New Zealand NZD = D3 dollars as economic self-isolation costs triggered the largest intraday decline ever in New Zealand equities.

Reporting by Saikat Chatterjee; Additional Stanley White reports in Tokyo; editing by Larry King

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