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Analysis

Risky assets | Weekly market review March 23 to 27, 2020


March 23, 2020
Risky assets | Weekly market review March 23 to 27, 2020

Risky assets remain under pressure due to the deterioration of the epidemiological situation, especially in Europe and the USA. The number of confirmed cases of coronavirus exceeded 350 thousand, and the number of deaths exceeded 15 thousand.

Central banks of the leading countries continue to expand monetary incentives. The amount of bonds purchases by the ECB will exceed 1.1 trillion euro, which is a record amount since the crisis of 2008-2009. The Fed has also expanded its quantitative easing program to include mortgage-backed securities.

The Reserve Bank of Australia announced the launch of the first quantitative easing program ever, which will target 3-year bond yields at 0.25%.

Inside these risky assets: The most significant weekly strengthening of the dollar since 2008 took place last week. In current conditions, investors prefer cash and US Treasury bonds, so the demand for the dollar is high. The pound plunged to a 35-year low, which was caused, among other things, by an emergency decision by the Bank of England to cut the interest rate from 0.25% to 0.1%.

The price of oil reached its lowest level since 2002, continuing to fall after the breakdown of the OPEC + agreement and the start of a price war by Saudi Arabia. Oil price found some support at around $20 per barrel.

Risky Assets | Main events of the current week

  • On Tuesday, data on manufacturing PMI in Germany and the UK will be published. Nike will report quarterly earnings after the market close.
  • On Wednesday, data on consumer price index in the UK will be presented, as well as durable goods orders in the United States and crude oil inventories.
  • On Thursday, the Bank of England will hold a meeting. UK retail sales and US GDP will be presented.
Categories: Analysis

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