Trading Plan – Monday 16th March 2020: Massive central bank stimulus fails to prop up equities
Events and Calendar
Needless to say, COVID-19 dominated the markets all week. Italy placed the entire country in lockdown. The WHO declared a global pandemic. The US banned travel from the EU.
Oil opened down 20% from the Friday close on Saudi/Russia price war and sank to 30% down before recovering slightly.
Bank of England cuts the base rate by 50bp in an unscheduled meeting.
Risk sentiment was surprisingly changeable but the risk-off periods had a bigger negative impact that the risk-on periods had a positive impact.
Equities entered bear market territory, although bounced back on Friday. All indices were significantly down on the week.
Commodity currencies and the GBP dropped. USD, EUR and JPY all strengthened.
Oil dropped 20% at the Sunday open and closed at the open price.
US10Y and US30Y yield hit new all-time low.
There was massive stimulus from multiple central banks announced on Sunday. The Fed cut the Fed Funds Rate by 100bp and introduced QE to the tune of USD700b. That’s billion. The Band of Japan doubled its own QE programme. The Bank of Canada cut rates by 50bp. The RBNZ in New Zealand cut rates by 75bp and promised QE in May if needed.
Equities have continued down, as has oil. The JPY continues to rise as commodity currencies fall. In the video, I give you my opinions on how to trade this week.
VIP Club members can watch the video HERE