Massive market sales. Is the global crisis on the horizon?

By 13/03/2020News
Morning Stock News

Gold   1585,08
(+0,50%)

EURUSD   1,1206
( +0,27%)

DJIA   21338,50
(+1,43%)

OIL.WTI  31,86
(+2,87%)

DAX   9003,45
(+ 0,05%)

Thursday was another day during which the markets were in a free fall. Now it is clear that everyone is in a state of panic, and there is nothing anyone can do about it. The U.S. is trying to support its economy, but so far it’s not doing well.


The S&P500 index chart of the day

The U.S. Federal Reserve began pumping money into its country to avoid a liquidity deficit. On Thursday, $500 billion in three-month repo transactions was offered. The next day another $500 billion for three-month repo operations and another $500 billion for one-month operations. This is a serious amount of money that should try for a while to stop the fall and premature bankruptcy of companies. The world’s major indexes are falling to record highs. The DAX index is losing 12.24%, record value since 1989, S&P500 is over 7%, DOW Jones index is over 7.5%.


Bitcoin

The entire crypto market collapsed on Thursday in literally one hour. Bitcoin lost 20% of its value and pulled all the other cryptocurrencies down. Total capitalization fell to $172 billion, about 88 billion less than a week earlier. It’s all like panic and fleeing to other assets. Bitcoin is now traded at $6,000, back to late 2018 levels.


Euro

On Thursday, the ECB decided not to reduce the interest rate and left it at a record low of 0%. On these statements the European currency rushed down and even touched the level of 1.1040, which we talked about a week ago. For the Euro it will be a difficult period, the ECB is taking action, but not as investors would like it to be.


GOLD

Gold fell 3% on Thursday after ECB announced its intention to keep rates at the current level. We can assume that the gold is falling because traders needed additional liquidity in the stock market. Due to record sales, probably, somebody has to sell the gold in order to add some liquidity and not get margin calls on other instruments. This fall is rather temporary and gold will recover in the near future.


What is waiting for us today?

05.30 Japan Business Activity Index in the Services Sector
13.45 Germany consumer price index for February
13.30 US Import Price Index


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