Markets are mixed while currencies range

Markets the US and around the world are mixed as investors and traders take a cautious stance on the economy. NASDAQ edges a 0.29% gain, while the S&P 500 and Dow Jones ended lower at 0.78% and 1.09%, respectively. AUS 200 edges lower.

Equity markets end fundamentally mixed

NASDAQ in Red, S&P 500 is in Blue, Dow Jones is in Orange

With the Coronavirus still front and center for many, investors are taking solace in “Coronavirus proof” equities – primarily in tech with their cashflow generating abilities during a downturn and their fortress balance sheets. This is on the back of Fed chair Jerome Powell stating that “we [the Fed] are not thinking about thinking about raising rates.” However, it would be unwise to fight against them propping up the market. If they are committed to asset purchases alongside no drastic negative news with regards to the Coronavirus, major indices should continue to tick up. It is interesting to note the Fed’s current dynamic, which is essentially a full believer of the markets during a boom, seem to doubt their ability to price securities in a downturn.

 

Currencies also end up mixed

Many currencies have been ranging with no significant moves to the upside or the downside. The cable has been fluctuating from 1.252 – 1.257, while the AUD/USD and NZD/USD have been trading between 0.68 -0.69 and 0.64-0.65, respectively. Currencies have been heavily affected by the risk of/risk-off dynamic that has been played out recently in the markets. Traders have been flocking to the USD on any negative sentiment due to the Coronavirus, and vice versa, when positive signs emerge.

The oil markets have a long way to go

Cushing Oil storage show that oil inventories have been decreasing

Oil markets have been struggling to cover the gap that was caused due to the Saudi / Russia price war and the Coronavirus. Brent and WTI are currently at $40.45 and $37.87, respectively, trying to cover that gap to $45.65 and $41.61, respectively. Furthermore, OPEC states they are committed to continuing the initial price cuts until the end of June; however, it maintains their bearish stance on oil demand. They forecast a drop of 9.1m barrels per day by the end of 2020.

With traders and investors experiencing relatively low-volatile trading days, this may be an excellent opportunity to assess current and future positions without the fear of the markets whipsawing against one’s trade.