Wall street It has closed with strong falls (Dow Jones: -4.06%; S&P 500: -3.37%; Nasdaq: -3.79%) after having bounced more than 20% from the lows of the crisis, marked this Monday. The speed of the market is so rapid that the Dow Jones It has gone from registering its fastest and most vertical bear market in history, with a 37% drop from highs, to starring in its best three-day bullish rally since 1931, at the time of the Great Depression. March 2020 will undoubtedly go down in stock market history as one of the craziest months on record. Over the past five sessions, the Dow has appreciated by a 12.8%, in its best week since 1938. The S&P 500 has appreciated 10.3%, in its best week since 2008; and the Nasdaq is up 9.1%.
And all this due to the COVID-19 pandemic, which has become a real shock to the world economy and has caused a sudden global recession, which has caused this great collapse of the bags. And almost in parallel, the great monetary response of the central banks and governments To prevent the health crisis and economic slowdown from becoming a financial and credit crisis, rear and violent rebound of world stock markets.
This being the case, investors consider that only one ingredient is missing so that the markets continue to rebound. Although perhaps the most difficult: the containment of the pandemic. The market is "in rebound phase", but still "has not made ground". That is the assessment made by analysts of HSBC of the current market situation. "In general, our narrative remains cautious. We are approaching the ground and the risk / reward ratio is improving"they state.
The broad fiscal and monetary stimulus announced by governments and central banks is very supportive, but they need to see "a slowdown in the number of new Covid-19 cases globally before starting to add more cyclical exposure. "
For the next few weeks, they still believe that downside risks to global equities. "To be more constructive, we need two catalysts: the first is a significant fiscal stimulus and the second is a slowdown in the number of new coronaviruses worldwide. We have seen considerable progress in the first, but we are not yet at the turning point for the second"they value.
In this sense, the spread of the coronavirus in the United States It will be one of the main catalysts for the market in the coming weeks. If the country manages to contain COVID-19 better than in Europe, the stock markets will continue to rebound. But if the pandemic behaves as in Italy or Spain, the economic impact may be greater and uncertainty will once again take over the markets, at least in the short term.
At the moment, according to the data published by the Johns Hopkins University, the infected in the USA rise 97,000, so the country has overtaken China in detected number of infections. The death toll amounts to 1,475. And while the state and New York City remain the main focus, other states like Washington and Louisiana are also affected.
Donald trump keep betting on one different strategy in each territory to contain the virus and thus avoid a total confinement of the country that causes a greater economic slowdown. However, the health experts They are committed to a coordinated response across the nation and confinement measures at the national level. Time will tell if Trump manages to contain the virus and if his response is being adequate.
ANALYSIS OF DOW JONES AND OTHER MARKETS
By technical analysis, the Dow Jones It has rebounded 18% from its intraday low of this crisis, 18,213 points. "The index has started to rebound, to the penny, from the 50% adjustment / retracement of all accumulated rise from the lows of the last great financial crisis, back in March 2009, "he says José María Rodríguez, analyst at Bolsamanía.
"But let's not fool ourselves, there is still a lot of fabric to cut. And that figure is not back, nor do we expect it in the short term, "adds this expert.
In other markets, oil West texas falls 6% to $ 21.22, the euro appreciates 0.5% and changes to $ 1,1083 and the profitability of 10-year American bond falls to 0.74%. For its part, the VIX volatility index rises 4% to 63 points.
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