Global equity markets surged, after the US Congress agreed to pass the biggest fiscal bill in US history, of up to $ US 2 Trillion! The massive support/bailout package is designed to go 'Big and Hard' to support business and worker alike. The bill supports businesses and workers that have been devastated by the economic shutdown, made to combat the spread of the coronavirus. The bill offers financial support for both business and low and middle income workers, also covering local Government, hospitals and further support for the Federal Reserve. The support/bailout/stimulus package was welcomed by equity markets, which surged another 1000+ points on the Dow. This followed the biggest point gains ever, over 2,100 points, triggered by the Feds 'QE Infinity'.
These unprecedented fiscal and monetary packages, are an attempt to mitigate the economic shutdown imposed by the Government, in an attempt to combat the biggest medical emergency in at least 100 years. The spread of the virus continues at an alarming rate in both Europe and the US. The Asian experience would hopefully indicate that Europe is peaking and may start to see a decline in deaths proportionately, although rates of infection continue to climb. The US experience will follow this track and perhaps overtake in actual numbers, although the US can employ techniques, that are proven effective in Europe and Asia. Australia and NZ follow the US will the benefit of learned experience.
The massive gains in markets allowed the safe haven Dollar to fall lower, with the EUR rising to 1.0870, while the GBP broke above 1.1900. This also sparked a rally in commodity currencies, as the AUD soared to 0.6070, although settle back to 0.5960 in early trade. The NZD broke back above 0.5900, despite the declaration of a National Emergency by the Government, but will open back around 0.5830.
Markets continue to experience extreme volatility and this will continue. The spread of the virus continues, at a frightening rate and this is wreaking havoc across all markets. The hope is that measures taken by Governments will contain and control the virus and allow markets to return to some form of normalcy, post the apocalypse. If this can be achieved in weeks, then the monetary and fiscal measures taken may ensure a sharp recovery in the third quarter.