News about: US S&P 500 Index, Oil Price, EURUSD Increase
Global stock markets crashed last week due to the growing concerns about the spread of coronavirus and its potential impact on global economic growth. The number of confirmed cases of coronavirus exceeded 83 thousand, and the number of deaths exceeded 2800.
The spread of coronavirus has significantly expanded, covering 55 countries. This circumstance caused panic among investors, fueling fears that the coronavirus will cause a global recession.
US 500 index fell almost 16% last week, which is the largest weekly drop since the Great Recession of 2008. 10-year Treasury bonds yield reached a historical minimum due to increased demand for safe-haven assets.
Against this background, the probability of interest rate cut by the Fed has significantly increased, putting downward pressure on the dollar. Declining demand for risky assets led to a further drop in oil price, which fell below $45.
EUR/USD rebounded significantly due to several factors:
- Dollar weakness amid expectations of an interest rate cut by the Fed.
- A change in the budget rule in Germany, which will allow increasing government spending.
- ECB President Christine Lagarde stated that the situation with coronavirus is not at a stage requiring the ECB’s response.
Main events of the week
- The first round of negotiations between the EU and the UK on a trade agreement will start on Monday and continue till Thursday.
- The OPEC + summit will be held on Thursday and Friday, at which further production cuts will be discussed.
- On Monday, the Manufacturing PMI of China, Germany, the UK, and the United States will be released.
- On Tuesday, the Reserve Bank of Australia will hold a meeting, at which it will decide on the interest rate.
- On Wednesday, data on Australian GDP, UK and US services PMI will be published, as well as data on ADP employment change and crude oil inventories. A meeting of the Bank of Canada will also take place.
- On Friday, data on employment in the USA and Canada will be presented, as well as retail sales in Australia.