Market movers today
It is the last trading day of another eventful week. Also today we will monitor the coronavirus crisis and what policymakers will do, not least in the US, where politicians are about to start negotiations on a third and much bigger emergency spending package of up to USD1,200bn.
There are no interesting data releases today.
Selected market news
Yesterday was another busy day for central banks. Danmarks Nationalbank hiked the interest rate on certificates of deposits by 15bp to -0.60% and the interest rate on its new emergency repo facility to -0.35%. The rate hike follows upward pressure on EUR/DKK and the resulting FX intervention. We are doubtful it will have much impact on the currency in the short term and see a risk that Danmarks Nationalbank will hike rates again if the outflow continues. Read more here .
Politicians have also been busy in Denmark. All parties in parliament have agreed on an extremely large fiscal package aimed at curbing the financial consequences of the coronavirus. In addition to what has already been adopted, the government expects the new package to cost DKK40 billion. On top of that comes loan schemes of another DKK60bn.
The Bank of England (BoE) also cut rates by 15 basis point to 0.1% yesterday and increased its bond purchase program by GDP200bn to GBP645bn. There was not a big market reaction, as it was already priced in. The BoE may very well have to increase the size soon.
As a reaction to the massive weakening of the Norwegian kroner we have seen recently, Norges Bank sent out a short press statement where they open the door for intervention. Norges Bank has refrained from intervening for decades highlighting the urgent nature of the announcement. EUR/NOK subsequently moved from 13.00 and down close to the 12.00 figure late in the session.
In the US, Senate Republicans unveiled a USD1trillion economic stimulus plan to provide funds directly to businesses and the American public, which would be the third emergency coronavirus bill from Congress.
On the data front, we got March preliminary Ifo index out of Germany showing a plunge of 8.4 points down to 87.7, which is still above the 80.1 trough during the global financial crisis. From the US, last week’s weekly jobless claims took a big jump to 281,000 (expected 220,000). We expect it to move a lot higher next week.
This morning, Asian shares rebounded with Asia-Pacific shares outside Japan up 3.2% following seven days of losses. E-Mini futures for the S&P 500 eased 1.2%, even with the news that California’s governor issued a state-wide “stay at home” order to its 40 million residents and Washington warned Americans to return home or stay abroad indefinitely as US coronavirus deaths reached 200. Also oil prices rallied overnight, with US crude at $26.17 a barrel on Friday, up from a low of $20.09.
