Global Depression・Pandemic: How long will the stock price decline chain continue!? "Key points and event schedule for March 10"
Yesterday, just as I thought we would open the windows wide, not only did we not close them, but the Cross Yen slid smoothly downward; in the Tokyo market, a flash crash saw the dollar-yen fall to the 101 yen range.
The stock market dropped more than 1,000 yen on the Nikkei Average.
Thereafter, declines continued in the European and American markets, and circuit breakers were triggered in the U.S. stock market, limiting trading.
The Dow Average fell by more than 2,000 dollars, creating a situation being called a world-wide depression.
The WHO has finally declared a pandemic.
We will be watching closely to see how long this situation lasts.
◎ Today’s Points of Focus
1) Stock price decline
Yesterday, a chain of stock price plunges continued from Japan to Europe to the United States, resulting in circuit breakers being triggered in the U.S. stock market.
The magnitude of the decline was record-setting; all eyes are on whether this wave will be carried over again in the Tokyo market.
With circuit breakers triggered in the United States, there have been two triggers (Level 1) in the past, but it seems this is the first time a Level 2 trigger has occurred.
That indicates how historically steep the drop was.
【Dealer's Voice】
— みんなのFX｜Traders Securities (@Min_FX)March 9, 2020
About the S&P 500 circuit breakers
Each circuit breaker triggers only once✍️
Level 1 (-7%) is a 15-minute halt of the entire market → already triggered
Level 2 (-13%) is a 15-minute halt of the entire market
Levels 1 and 2 can be triggered until 28:25 JST✍️
Level 3 (-20%) stops all trading for the day✍️
As a notable point of stock price decline, the Bank of Japan’s ETF purchases are in focus.
Yesterday they were 60 billion yen, and with the Nikkei Average temporarily dipping below 19,000, today’s BOJ purchase amount is of interest.
Whether they can support prices or whether 19,000 will be clearly breached are points to watch.
2) Crude oil prices
Because OPEC+ could not agree on further cuts, Russia is increasing production, and Saudi Arabia is responding by upping its output.
Oil prices fell due to concerns about reduced demand and increased supply, with WTI dropping below $30 at one point.
The outlook for how far the production battle between Russia and Saudi Arabia will continue is unclear, and a clear point for oil price recovery has not emerged.
However, oil prices will not become free, so below $30 may present a buying opportunity.
As prices fall, it remains to be seen how long Saudi Arabia, Russia, and U.S. producers can hold out; if fewer producers remain, supply will fall and prices may rise.
I want to pay attention to the bottoming out and the timing of a rise in prices.
3) Fiscal measures by countries
The United States approved a budget plan of $83 billion last week.
There are statements that coordinated fiscal measures in the EU are important as well.
Japan is also preparing for a monetary policy decision meeting next week, but there are expectations that monetary policy alone may not be enough, and there is a growing focus on fiscal measures.
With risk-off sentiment, the sharp decline in stock prices is a focal point; the question is whether large-scale fiscal measures can halt the decline and whether there can be a fiscal stimulus with enough impact to offset the effects of COVID-19 (novel coronavirus).
◎ Today’s Event Schedule
March 10 (Tuesday)
09:30 AUD Australia NAB Business Confidence Index
10:00 NZDoros RBNZ Governor’s Speech
10:30 CNY China CPI (Consumer Price Index)
15:00 NOK Norway CPI
19:00 EUR Eurozone GDP (Q4) (final)・Employment Statistics
March 11 (Wednesday)
02:00 USD U.S. 3-year Bond Auction
07:00 AUDDebell RBA Assistant Governor’s Remarks
08:30 AUD Westpac Consumer Confidence Index
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