The US Governments discussion on fiscal stimulus in the form of economic support for among others, the airline, cruise and shale oil industries, along with a payroll tax cut saw Wall Street and the Dollar rebound yesterday. The three major US indices all closed nearly 5.0% up on the day in very choppy trade. The Graph below shows the S&P500 and one can clearly see the crash and recovery of the last couple of days. Investors, however, remain cautious and US futures are currently down while Asian stocks are flat. The JSE All-Share index closed 1.32% higher yesterday with only the Gold sector on the losing side.
The Dollar, which closed at 1.1280 against the Euro last night, has slipped back to 1.1343 this morning as US Treasury yields fall from last night’s highs and markets await the actual details of the fiscal stimulus. Analysts are still looking for a further cut in US interest rates from the Fed next week. The Rand continues its rollercoaster ride, trading in a 15.7500/16.1100 range yesterday. We are currently sitting in the middle of the range at 16.0100 in early morning trade. As we can see from the below graph the Rand was in for a rough ride the past couple of days.
The Oil price has recovered from its lows as the Saudi output hike is set off by cuts from US suppliers. Brent is currently trading at $38.25 per barrel. Gold is a touch firmer this morning at $1 664.00 as investors remain risk-averse.
We have US CPI and Crude oil inventories data out today which could impact markets.