Equity Markets
After the health officials reiterated the need to proceed with caution, Federal Reserve Chair, Jerome Powell is now warning of the economic risks and how the coronavirus crisis raises longer-term concerns that could leave behind lasting damage to the productive capacity of the economy:
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The scope and speed of this downturn are without modern precedent, significantly worse than any recession since World War II. We are seeing a severe decline in economic activity and in employment, and already the job gains of the past decade have been erased.
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Risk sentiment took another blow as the Fed stated that the downturn is significantly worse than any recession since World War II. All three major US benchmarks ended deep in the red for a second consecutive day.
- Dow Jones Average Industrial lost 517 points or 2.2% to 23,248.
- S&P500 fell by 50 points or 1.8% to 2,820.
- Nasdaq Composite erased 139 points or 1.6% to 8,863.
Currency Markets
In the FX space, the US dollar strengthened against major currencies in the European and US session. As risk sentiment deteriorates, safe-haven currencies like the greenback and Japanese Yen gained momentum.
The Fed Chair was the main event for the forex market in the US session on Wednesday. As of writing, the US dollar index, which tracks the performance of a basket of currencies against the greenback, rose to 100.24.
The New Zealand dollar emerged as the worst performer, dragged by the RBNZ’s monetary policy statement.
- The RBNZ left the OCR unchanged at 0.25% but is prepared to reduce the OCR further if and when needed.
- The central bank also surprisingly announced to significantly expand quantitative easing programme potential to $60 billion, up from the previous $33 billion limits
Commodities
The oil industry remains driven by an oil glut and prospects that productions cuts and reopening plans will slowly bring some stability. After the API report showed that inventory fell to 7.6M on May 8 from the previous 8.44M, another bullish weekly report helped oil prices to edge higher.
According to the Energy Information Administration (EIA), crude oil inventories in the United States decreased by 0.7 million barrels in the week ending May 8th. This reading came in lower than the market expectations for an increase of 4.1 million barrels.
As of writing, WTI Crude oil (Nymex) is currently trading at $25.45 while Brent Crude (ICE) is trading at 29.32.
Gold
The precious metal also received the classic haven boost amid uncertainties and warnings from policymakers. As of writing, the XAUUSD pair is trading in the vicinity of $1,717.
Key Economic Events
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Upcoming Earnings Report
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Company
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Reporting Time
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Teleconference/ Webcast Time
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Applied Materials, Inc. (NASDAQ: AMAT)
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Thursday, 14 May 2020
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Webcast 1:30 PM (PT)
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Upcoming Webinars
Lunch Time Session: First Steps in Forex For New and Beginner Traders Thursday 14 May, 8:00 PM – 9:00 PM AEST | Register now
Friday 15 May, 12:30 PM – 1:15 PM AEST | Register now
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