The Friday Market Minute
- Global stocks attempt a Friday rally amid the worst week for stocks since the global financial crisis.
- The dollar eases and oil gains, pulling emerging market stocks higher and setting up Wall Street for a solid Friday open.
- U.S. lawmakers debate $1 trillion coronavirus relief bill.
- Coronavirus deaths top 10,000 worldwide, however, with cases nearing 250,000 as California orders its 40 million citizens to shelter at home.
- Oil turns negative after Russia rejects reports that President Trump may intervene in the ongoing price war with Saudi Arabia.
- Bond markets steady after the Fed's $450 billion in swap lines, as well as new QE programs from the ECB and the BoE in Europe, with 10-year Treasuries holding at 1.02%
- The VIX slides to 69 points, the lowest in nearly a week, but quadruple witching hour awaits Wall Street on the third Friday of the quarter end.
- U.S. equity futures suggest solid opening bell gains ahead of existing home sales data at 10:00 am Eastern time.
U.S. equity futures bounced higher Friday, while global stocks attempted a late-week rally following historic sell-offs in markets around the world, but with coronavirus deaths topping 10,000 and California ordering its 40 million citizens to stay at home, investors could face another wild day on Wall Street.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, eased notably in overnight trading, thanks in part to a deeper risk appetite in Asia trading and some $450 billion in swap lines unleashed yesterday by the Federal Reserve.
The dollar's advance this week, during which it gained nearly 3.5% against its peers, has put significant stress on emerging market economies and helped trigger broad-based selling in markets from gold to U.S. Treasuries.
The dollar's overnight gains were also paralleled by a sharp rally in global crude prices, which jumped more than 5% in early European dealing amid reports that President Donald Trump is prepared to intervene in the ongoing price war between Saudi Arabia and Russia that has driven markets to their lowest levels in nearly 20 years.
Oil pared gains, however, after Russia said it didn't need mediation with Riyadh and that it was comfortable with a global price of $25 a barrel.
Still, the early combination of dollar weakness and oil strength, matched with the prospect of a Senate relief package of around $1 trillion to cushion the impact of the impending U.S. recession, helped stocks book solid overnight gains, setting up Wall Street for a firm Friday rally amid the worst week since the global financial crisis.
Contracts tied to the Dow Jones Industrial Average suggest a 180 point opening bell gain while those linked to the S&P 500 are indicating a 17 point advance for the broader benchmark. Nasdaq futures are guiding to a 184 point gain for the tech-focused index.
The CBOE's key volatility gauge, known as the VIX, was marked 4% lower at 69.06, and some 13 points south of its record high, meaning options traders are pricing in a 69% chance that the S&P 500 will rise or fall by 69% over the next year.
Stocks will, however, face the potential of increased volatility thanks to what is known as quadruple witching hour, a condition unique to the third Friday of the final month of each quarter during which investors clean our positions in index and stock options.
California Governor Gavin Newsom’s decision to issue a shelter-in-place order, however, as well as a global coronavirus case count of nearly 250,000, with more than 10,000 deaths, is also likely to weigh on equity market sentiment.
“A state as large as ours, a nation-state, is many parts, but at the end of the day, we’re one body," Governor Newsom said in a statement. "There’s a mutuality, there’s a recognition of our interdependence that requires of this moment that we direct a statewide order for people to stay at home,”
Still, European stocks were able to hold solid gains through the opening hour of the session -- a rare feat in this historic week -- following the Bank of England's emergency rate cut yesterday and the European Central Bank's easing two days earlier.
The Stoxx 600 was marked 3% higher in Frankfurt, lead to the upside by Germany's DAX performance index, while Britain's FTSE jumped 2.2% on the strength of banking and energy stocks.
The U.S. dollar index slipped 1.3% to 101.40 in overnight trade, although it's still hovering at a three-year high, while gold jumped 2.2% to $1,511.00 per ounce
Overnight in Asia, Japan's Nikkei 225 was closed for the country's Spring Equinox holiday, but a softer yen -- the region's traditional safe-haven trade --- as well as planned stimulus from China lifted the MSCI ex-Japan index by more than 5% heading into the final hours of trading, although the benchmark is still down more than 20% over the past two weeks.