The U.S. stock market swings wildly day by day ahead of the U.S. and Canada employment data—will today be the up or the down?! "Points of interest on March 6 and event schedule"
Yesterday, California's state of emergency may have triggered a drop in European and American stocks, with the Dow Jones Industrial Average briefly falling by more than 1,000 points.
Lately, analyses have suggested that as trading becomes more AI-driven and system-based, declines tend to accelerate once they begin, while rises tend not to stop, tending to move in one direction.
When there is bad news, every AI tends to decide to sell, creating a market where selling calls for more selling and the system continues to sell mechanically, leading to daily sharp rises and falls.
Looking back this week, we have alternated between yen appreciation and depreciation, and stock gains and losses on a daily basis.
Today, I wonder whether it will continue to alternate, or whether it will resume declines.
◎ Points of Interest Yesterday
1) Employment Statistics
Today, employment statistics will be released in the United States and Canada.
Even if the Dow's largest-ever drop is not expected, these are employment statistics from a period during which COVID-19 impacts are emerging mainly in China.
Regarding U.S. employment statistics, given that the ADP employment data has been beating expectations, if today’s employment figures come in below expectations, the dollar is likely to weaken.
Also, as of this morning, the probability of a 0.5% rate cut at the March FOMC is being priced in.
There is a possibility that the expectations for further rate cuts could advance depending on the employment results, so caution is needed.
For Canada’s employment data, given that a 0.5% rate cut was recently implemented and additional easing is hinted, the chance of further rate cuts could rise depending on the employment results, so please stay attentive.
2) Impact of COVID-19 (novel coronavirus)
Japan has announced entry restrictions (quarantine strengthening and isolation) from China and South Korea, and other countries are tightening entry controls as well.
With national self-imposed isolation increasing, supply chains are disrupted, having a major impact on manufacturing.
Until the number of infections and affected areas stop expanding, countries will continue to respond, potentially leading to a global economic downturn.
Until the outbreak is brought under control or an outlook for its end is clear, expect continued risk-off sentiment.
3) Responses by Countries and Central Banks
In the United States, the Fed announced an emergency rate cut, and the U.S. Congress approved a budget package of $8.3 billion in relief measures.
Italy is also reportedly preparing 7.5 billion euros in stimulus measures.
Rate cuts have been made in Canada and Australia, and rate cuts are expected in the United Kingdom.
From today onward, it is anticipated that many countries will release fiscal and monetary measures, so we will monitor their contents and the impact on stock prices and exchange rates.
4) UK-EU FTA Negotiations
The talks between the UK and the EU over Brexit are being protracted.
EU negotiator Barnier has stated that there are serious gaps in competition policy, judicial cooperation, the management of the UK fishing waters, and the manner in which any agreement would be constructed.
UK Prime Minister Boris Johnson has said that if negotiations do not conclude by June, there will be a no-deal Brexit.
We should continue to pay attention to statements from both sides; especially in the UK, political moves can occur over the weekend, so please manage risk carefully.
5) OPEC Plus
Yesterday, OPEC reached an agreement on additional production cuts.
However, cooperation from Russia is said to be a condition.
Today, besides OPEC members, non-member countries including Russia will also gather for discussions.
We will watch how much cooperation non-members around Russia will provide in production cuts and how much OPEC Plus' coordinated cuts will support crude oil prices.
◎ Today's Event Schedule
March 6 (Friday)
OPEC Plus Meeting
09:30 AUDAustralian Retail Sales
10:00 USDKashkari - President of the Minneapolis Fed (2020 voting rights)
10:30 USDWilliams - President of the New York Fed
17:30 GBP Halifax House Price Index
22:30 USDNFP Employment Data, Average Hourly Earnings, Unemployment Rate・Trade Balance
22:30 CADCanada Employment Change and Unemployment Rate・Trade Balance
23:20 USD Evans - President of the Chicago Fed (2021 voting rights)・Mester - President of the Cleveland Fed (2020 and 2022 voting rights)
March 7 (Saturday)
00:00 CAD Ivey PMI
01:20 USD Bullard - President of the St. Louis Fed (2022 voting rights)
03:00 USD Baker Hughes Rig Count
04:00 USDWilliams - President of the New York Fed, Rosengren・President of the Boston Fed (2022 voting rights)
05:00 USD Consumer Credit
05:30 USD George - President of the Federal Reserve Bank of Kansas City (2022 voting rights)
March 8 (Sunday)
U.S. daylight saving time begins
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