U.S. Equities jumped the most since 2008 to cap a wild week of trading as President Donald Trump joined world leaders in pledging to do whatever it takes to protect the economy from the Coronavirus fallout. The S&P 500 surged more than 9%, providing some respite a day after stocks’ worst session since 1987. Equities went on a tear in the last half-hour of trading as Trump declared a national emergency to help combat the virus, moved to prop up energy prices, declared a moratorium of federal student-loan interest and said the private sector will help with efforts to expand testing. That added to optimism about a robust public policy response after the Federal Reserve said it was buying $37 billion of bonds across maturities. Oil climbed as Trump said the U.S. will step up purchases for strategic reserves. The US Dollar posted its best week since 2008. Treasury yields rose and stress in the credit markets showed signs of easing. Precious metals tumbled, with silver down almost 9% and palladium posting its worst week on record. After days of no or inadequate action, policy prescriptions came fast Friday. As Trump announced his plans, Congress was also working on a relief bill. The European Union prepared to suspend government spending rules, and regulators in Italy and Spain banned short-selling on some stocks. China’s central bank said it would pump in $79 billion to bolster the economy.
In a desperate move the Federal Reserve held an Emergency Meeting and cut Interest Rates by 1% to Zero at 9.00 pm last night. Treasuries surged and U.S. Equity Futures tumbled at the start of another volatile week as investors responded to a rapidly escalating economic hit from the Coronavirus and a massive emergency move by the Federal Reserve to ease policy. Benchmark Treasury yields declined more than 30 basis points at one point, while Futures on the S&P 500 Index hit trading limits and fell about 5%, following Friday’s rebound on Wall Street. European contracts slumped. While the Fed and other central banks strengthened efforts to stabilize capital markets, investors are also reacting to a rapid deterioration in the global economy. Nike Inc. and Apple Inc. announced mass store closings, and Fed Chairman Jerome Powell said growth next quarter will be weak. The Japanese Yen jumped after the Fed and five counterparts also said they would deploy Foreign-Exchange Swap Lines. Australian equities fell almost 10%, the most since 1992 even after the Reserve Bank of Australia said it stood ready to buy bonds for the first time — an announcement that sent yields tumbling. New Zealand’s currency slumped after an emergency rate cut there. Meantime, China reported Monday that Output and Retail Sales plunged the past two months. Oil resumed its trenchant decline.
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