Technical rebound, not bottom yet | CMC Markets Daily Commentary
The Wall Street embraced a decent rebound overnight, as dollar liquidity strain was alleviated by the Fed’s unlimited asset purchasing promise with hopes that a US$ 2 trillion stimulus package will eventually be passed. This, however, does not solve the underlying issue, the virus. Nonetheless, a technical rebound for a few days or even weeks could still provide a window of opportunity for investors to reshuffle their investment portfolio.
With severe global supply chain disruptions and a much weaker consumption demand in major economies due to increasing social distancing measures, it is hard to convince anyone that this storm is ending anytime soon.
Airlines and shale oil companies are on the frontline of the downturn, and some of them may seek government bailout in the months to come. Pay cuts and headcount freezes is already happening in Singapore Airlines and BreadTalk, and more are expected to come.
Tomorrow, Singapore will announce a supplementary fiscal stimulus package that is forecast to be at S$ 14-16 billion, to cushion the employment market and help the vulnerable. Singapore has also banned all bars, entertainment and large gatherings last night, in view of rising unlinked cases locally.
We are in unprecedented times.
Consumer sentiment could get far worse before a real recovery can be seen.
Dollar has fallen for a fourth consecutive day, so is the volatility index. Softer dollar boosted a rebound in both gold and oil, which are trading at US$ 1,620 and US$ 24.5 respectively.
Technically, a Fibonacci retracement points out that S&P 500 index could head toward 2,646 area (38.2% retracement level) before major selling pressure emerges.
US SPX 500 – Cash
CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.