Day Ahead: Top Things to Watch for March 13

• 2020-03-13
• Traiding Idea

Last night, the US stock market crashed. The Dow Jones Index, the NASDAQ, and the S&P 500 fell by 9.5% to 10%. All three indices are at least 25% off their recent peaks. It was the worst day in the US stock markets since the year 1987. Usually, when the stock market falls 20% from its recent high, The market has officially entered a downward trend. Investors are cashing out from the financial markets.

Even gold price has failed to survive investors' need for liquidity and has fallen from $ 1,700 to $ 1,550. Even the $ 1.5 trillion US Federal Reserve injection was unable to provide market liquidity. In the cryptocurrency market, the conditions are not very interesting, either. Bitcoin prices have fallen more than 30% in the past four hours to around $ 5,000. This bitcoin price move shows that this digital currency has no value as a safe or secure asset.

In Asia, regional stock indices have been able to offset some of the initial declines today. The futures index of the S&P 500 has managed to offset a 3% drop and even grow by 2%. Some European stock indices have also risen. On the last trading day of the week, it seems that relative calm is returning to the financial markets, and sales pressure is reduced. However, global stock markets have been recording the worst week since the year 2008 to date.

The demand for liquidity has risen sharply. In the bond market, US Treasury yields have fluctuated, and Australian and Japanese bond yields have declined. Coronavirus fighting methods such as quarantine and event closures and cancellations of travel have led to a sharp decline in aggregate demand. For this reason, investors believe that consumers cannot buy due to quarantine restrictions, and lowering interest rates or even paying salaries cannot help the current situation. However, if conditions return to normal, demand will increase in all markets.

The US Federal Reserve has announced it will spend $ 1.5 trillion over three days to raise cash. It spent half a trillion dollars in less than 30 minutes yesterday. The Central Bank of Japan has announced that it will buy $ 1.9 billion worth of bonds following the US Federal Reserve. The European Central Bank yesterday increased the volume of monthly bond purchases and removed capital restrictions for commercial banks. All central banks are pumping liquidity into the financial system. However, investors are still withdrawing their cash from the market. In the current situation, investors prefer to save money rather than consume it.