Market News

The US Senate has passed the $2 trillion stimulus plans that will be voted by the House of Representatives on Friday morning. However, the news did not provide greater momentum for the markets. The stock market in the Asia-Pacific region was in general weak. The Nikkei retraced significantly, closing down 4.5% to 18664 points.

Although the European Central Bank did not cut the interest rates after the emergency meeting and only launched bond purchasing plan of 750 billion euros, Bloomberg quoted that the meeting had discussed the Outright Monetary Transactions (OMT), which is much more less restrictive, meaning that ECB may pave the way for unlimited debt purchases.

Now, it is worrying that the cumulative number of confirmed cases in the United States exceeded 55000, with a sharp increase of more than 8500 in a single day. The current cumulative number of diagnoses in the United States is the third highest in the world after China and Italy, and is expected to continue to rise in the short term.

On Wednesday (March 25) in the Asian session, the latest news is that the Republican and Democratic parties will agree on the stimulus plan. The White House also confirmed that news, further boosting the market sentiment.

On Tuesday (March 24) major changes happened in the gold market. Due to the epidemic issue, gold mines and refineries around the world have reduced their operations, severely affected the physical supply chain, causing the gold market non function. Banks and brokers were not able to get quotes effectively or fairly.

The Federal Reserve (Fed) announced on Monday an “unlimited” amount of quantitative easing measures and plans to support credit markets to boost the economy, which has been severely damaged by the global pandemic. The Asia-Pacific stock market is doing well today, with the Nikkei rising by more than 1200 points and the Hong Kong HSI currently rising by nearly 1,000 points.

The Fed stated that it would purchase "in the amounts needed" U.S. Treasuries and mortgage-backed securities (MBS) to support smooth market functioning and effective transmission of monetary policy to broader financial conditions and the economy. This is in the form of  "unlimited QE". It is also known as "helicopter money".

Liquidity issue would be the one of the negative factors in gold market. Earlier, the Federal Reserve operated dollar swap with nine central banks: Australia, Brazil, Denmark, South Korea, Mexico, Norway, New Zealand, Singapore, and Sweden, with quotas of up to $ 60 billion each. For the other major central banks, including the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank, the Federal Reserve announced an increase in dollar swap quotas to further inject liquidity in the market.

RBNZ will launch a bond purchasing program of up to NZ$30 billion, buying multi-year bonds over the next 12 months and NZ$500 million this week.

After a weekend, the investment market is increasingly worried that the global economy will experience a severe recession or even a depression. Most analysts now believe that the global economy will experience double-digit decline in the second quarter. This week, global investors will pay attention to whether the stimulus measures taken by governments can boost the market confidence.