Market Brief: March 19th, 2020

A daily summary of news, analysis and data shaping the market.
Market Brief
Thursday, March 19, 2020
Central Banks Take More Actions. Stocks ended Thursday in positive territory as the price of oil rebounded and investors digested new central-bank action while waiting for news on the fiscal-stimulus front. Bond yields around the world fell. The Dow Jones Industrial Average closed up about 190 points, or 1%, after having been down more than 700 points shortly after the open and rising over 500 points around midday. The S&P 500 gained 0.5%, and the Nasdaq Composite climbed 2.3%.
DJIA 20,087.19 188.27
S&P 500 2,409.39 11.29
NASDAQ 7,150.58 160.73
US 10-Year Note 1.16 -0.02
Dollar Index 102.59 1.43
Crude Oil 25.40 5.03
Gold 1,475.00 -2.90
Global Dow 2,233.93 -109.53
Powered by Dow Jones Research, FactSet, Eurostat, SIX Financial Information.
ECB Launches Mammoth, Open-Ended Bond-Buying Package
The European Central Bank announced on Wednesday night an extraordinary 750 billion euro asset-buying program to help the eurozone fight the consequences of the coronavirus outbreak and support “all citizens of the euro area through this extremely challenging time.”

After a late-night videoconference call, the ECB’s governing council made it clear that its new “pandemic emergency purchase programme” wouldn’t be constrained by the self-imposed limits of its previous and current quantitative easing policies.

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The Fed Extends Dollar Liquidity to 9 New Central Banks
The Federal Reserve is starting to offer dollar liquidity to a broader range of countries around the world. But strategists say it might not be enough to offset the demand for the U.S. currency from emerging markets.

On Thursday morning, the Fed said it had started temporary currency swap lines with the central banks of nine countries: Australia, Brazil, Denmark, South Korea, Mexico, Norway, New Zealand, Singapore, and Sweden. These nine central banks also received extra help with U.S. dollar liquidity during the 2008-2009 financial crisis.

The step was likely the Fed’s attempt to ease pressure on the greenback, as global banks, investors, and companies rush to secure liquid dollar investments. Because the dollar is the currency of global trade, global companies experiencing steep declines in revenue may need to borrow dollars to pay suppliers, strategists say.

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The Fed Said It Will Backstop Prime Money-Market Funds. Here’s What That Means.
The Federal Reserve announced late Wednesday night its plan to safeguard the $3.8 trillion held in money-market funds.

The Money Market Mutual Fund Liquidity Facility, or MMLF, will lend money to institutions to purchase high-quality securities from money-market funds. The loans will be secured by those assets. “The MMLF will assist money-market funds in meeting demands for redemptions…enhancing overall market functioning and credit provision to the broader economy,” according to a Fed statement.

In other words, if money-market funds have trouble selling their holdings to meet increasing redemptions, the Federal Reserve Bank of Boston, which the program is being run through, will loan money to institutions to be the buyers for those securities. The program will be in effect through Sept. 2020.

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President Trump Praises Antiviral Treatments in FDA News Conference
In a crowded press conference at noon Thursday, President Donald Trump talked hopefully about potential treatments for the coronavirus. Surrounded by federal medical officials, he touted the prospects of the drug chloroquine. which is widely available for malaria, but not tested or approved to treat Covid-19. Trump also gave shout-outs to still experimental products from Gilead Sciences and Regeneron Pharmaceuticals.

Trump said that he was “very excited” about chloroquine, an inexpensive generic product used for decades against malaria and arthritis. “There are a lot of reasons why I think it could have a positive effect,” said the president. “It’s been out for years and we know it could be taken safely.”

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Oil Rallies, With U.S. Prices Scoring Their Biggest Daily Percentage Climb on Record
Oil prices bounced off their lowest levels in 20 years on Thursday, with U.S. prices scoring their largest one-day percentage climb on record,

Investors absorbed news of a plethora of central bank and government support measures to combat the economic fallout from the coronavirus pandemic, Russia indicated it would like to see higher prices, and the Trump administration reportedly said it may intervene in oil-price war between Saudi Arabia and Russia.

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Siemens CEO to Step Down by Early Next Year
German industrial engineering company Siemens AG on Thursday said Chief Executive Joe Kaeser would be replaced by current Deputy CEO Roland Busch by early next year, cementing the company’s shift from a conglomerate into a business more focused on digital transformation.

Mr. Busch, a technician who was put on a fast track to succeed Mr. Kaeser last fall, is to take over as CEO at latest after the group’s next ordinary shareholder meeting in February 2021, Siemens said in a statement.

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Ford Suspends Its Dividend, Shuts North American Factories
Ford Motor has suspended its dividend and is temporarily halting car production in the U.S., Canada, and Mexico as it and other companies reel from the spreading coronavirus epidemic.

Ford said the move was necessary to preserve cash and provide additional financial flexibility.

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The U.S. Needs More Ventilators. GM and Ford Might Help Make Them.
As public health authorities ring warning bells about a shortage of ventilators needed to treat the most seriously ill Covid-19 patients, two major car manufacturers said they were looking into helping manufacture the devices.

A General Motors spokesman confirmed to Barron’s that the company is evaluating the possibility of making ventilators, and looking into how it can be useful. Ford didn’t immediately respond to a request for comment, but a spokeswoman told Automotive News that the company is in preliminary talks with government officials in the U.S. and Britain about making ventilators, and was investigating whether it was feasible.

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Jobless Claims Surge as Companies Shed Workers Amid Coronavirus
Employers have quickly started to shed workers as the coronavirus outbreak closes businesses and keeps consumers home, evidenced by a 33% jump in claims for unemployment benefits.

In the week ending March 14, 281,000 Americans filed for first-time unemployment insurance, the Labor Department said Thursday. That was up 70,000 from the previous week and it reflects the highest level since early September 2017.

Weekly jobless claims are the best indicator investors and economists have at this point to try to gauge the outbreak’s toll on the U.S. economy. Most data series are monthly, and they’re still not picking up the impact because of measurement dates. Some states in recent days have said increases in claims have been massive, and reports have suggested sites to file for unemployment benefits have been overwhelmed.

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Microsoft Teams, Slack’s Rival, Has 44 Million Daily Users. 12 Million Started in a Week.
Microsoft has reached 44 million daily active users for Teams, the collaborative communications service that is part of the Office 365 productivity suite, the company said Thursday. That’s up from the 20 million users disclosed last November.

Teams is the primary rival for Slack Technologies, which announced 12 million users last October. Neither company releases user data on a routine basis. Microsoft said that the user total has accelerated over the last week as more people work remotely amid the Covid-19 pandemic. The user total rose 12 million from March 11 to Wednesday.

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