Monday, April 6 brought significant increases in the US stock market. The stabilization of the situation in New York and Western European countries, as well as subsequent actions of the Federal Reserve, may contribute to this.
To facilitate lending to small businesses via the Small Business Administration's Paycheck Protection Program (PPP), the Federal Reserve will establish a facility to provide term financing backed by PPP loans. Additional details will be announced this week – Fed says. This means, more or less, that not directly, but indirectly, the Fed will support lending to small businesses through the purchase of loans granted to these companies by commercial banks.
As a result, the S&P 500 increased by 7.03%, ending the session at 21.3%. below the highest closing of 19 February. The Dow Jones Industrial Average gained 7.73 percent this means that the index has fallen so far by 22.7 percent compared to the highest level of February 12. Nasdaq COMP gained 7.32% and ended the session by 19.4 percent below the record closing level of 19 February. It seems that investors have an appetite for further increases. This may be indicated by futures, which still seem to be rising, gaining from 0.5 to 0.75 percent.
Positive information also appeared in the oil market. The price of crude oil seems to be rising after information from Reuters. According to the latest news, the largest oil producers in the world, including Saudi Arabia and Russia, are likely to agree to cut production if the United States does. The meeting, which was to take place on Monday, was postponed to Thursday, April 9. For the price of WTI oil to return to the levels it had before breaking the OPEC + alliance, it would have to rise by over 50%.
Meanwhile, on the currency market, the Reserve Bank of Australia (RBA) did not change interest rates today, maintaining the main one at 0.25 percent. Policy makers said they would not raise their target interest rate until full employment was made and until they were confident that inflation would stay within 2-3 percent. RBA added that it has already bought AUD 36 billion bonds on the secondary market. It was also confirmed that a very large decline in the economy is expected in the second quarter and the unemployment rate is estimated at the highest level for many years.
Daniel Kostecki, chief analyst at Conotoxia Ltd. (Forex Cinkciarz.pl service)
The above comment is not a recommendation within the meaning of the Regulation of the Minister of Finance of October 19, 2005. It has been prepared for information purposes and should not be the basis for making investment decisions. Neither the author of the study nor Conotoxia Ltd. are responsible for investment decisions made on the basis of the information contained in this commentary. Copying or reproduction of this document without the written permission of Conotoxia Ltd. is prohibited.
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