The Fed kept the rates unchanged as expected but it promised to use full range of tools to support the US economy to tackle considerable risk from the coronavirus pandemic. The ECB also kept the rates unchanged and the Pandemic Emergency Purchase Program remained unchanged at 750 billion euros, but it lowered the rate of targeted longer term refinancing operations (TLTRO).
The Consumer Confidence Index dropped sharply to 86.9 in April, reflecting the severe impact on the U.S. economy under the global pandemic, which hit the market sentiment on Tuesday. On the other hand, this week investors are looking forward to the result of the FOMC meeting. The market turned cautious, making the three major Wall Street indexes rose at the opening, but finally failed to maintain the recent strength.
Oil prices plunged again. The June contract for WTI crude futures dropped more than 20%, and the June contract for Brent crude also fell below $20. Besides the concern of global crude oil storage capacity, the market is worried that the United States Oil Fund (USO), the world’s largest crude oil ETF, will sell all of its June contracts of WTI and transfer its holding to the longer-term contracts, which added selling pressure to oil prices. However, due to certain expectations of the decline in oil prices, the news has just little impact on investor sentiment.
Oil prices extended the rebound, and investors are expecting that some states in the US will ease the lockdown measures by steps, and US President Trump signed the new economic stimulus packages, supporting the Wall Street’s three major indexes all rose more than 1%. The market maintains optimism, which make the dollar lower last Friday. The Volatility Index (VIX), which usually reflects the level of risk or investor panic, fell to its lowest level since early March.
The initial jobless claims in the US last week fell for three consecutive weeks to 4.427 million, while the continuing claims jumped to the record high 15.976 million. As both figures were slightly better than expected, investors believe that the most severe situation may be over for the US labor market. In addition, the US Congress has passed the new economic stimulus plan, which further boosted risk appetite, that supporting the global stock market. However, a report from the WHO showed the failure of the clinical trial of “Remdesivir”. Sentiment turned to risk-off, so that all three Wall Street indexes retraced all the gain on Thursday, and closed mixed.
The oil prices finally bounced back after the dramatic drop earlier. The June WTI crude futures was up 19% mainly due to the expectation of a further production cut from OPEC+. Oil inventories surged less than expected, and tensions have been heightened between the US and Iran after Trump’s instruction, also triggering the rebound. In addition, the market is looking forward to the new economic stimulus package from the US. The three major Wall Street indexes all rose, regaining Tuesday’s lost ground, as risk appetite improved across markets.
The outlook of oil prices is still extremely gloomy. The June contract of WTI crude futures fell sharply, once dropped below the $10 mark. Although there was a rebound in the late US session, the WTI still closed 43% lower! The plunge has boosted risk aversion so that the three major Wall Street indexes all fell more than 2%.
The volatility of oil prices remained in focus on Monday. The WTI crude futures finally collapsed dramatically to negative territory, crashed more than 300%. The crazy plunge in oil prices triggered risk aversion in the financial markets, and the three major Wall Street indexes all fell, which the DOW declined the most by 2.44%.
The poor performance of the economic figures released by the US recently had just little effect on the market sentiment last Friday. President Trump announced the guidelines for reopening the economy, which boosted the market sentiment, and the good news from “Remdesivir” developed by US pharmaceutical companies also boosted the hopes on a potential coronavirus treatment, supporting the three major Wall Street indexes all rose, with the Dow rose nearly 3%.
The initial jobless claims in the United States dropped to 5.245 million for the last week, but the figures still slightly more than expected, showing that it may be a deep economic slump caused by the coronavirus outbreak. The analysis generally believes that the figures will remain at the high level in the coming weeks. US stocks indexes fell at the opening due to the investor fears. However, US President Trump announced guidelines for reopening the US economy, stimulating the market sentiment again. The Wall Street three major indexes recovered the loss and closed slightly higher, which the “strong” Nasdaq rose 1.66%.