Updated: Mar 9

MARKET BRIEFING: Monday 9th March 2020


Monday: JN GDP, Current Account, GE Trade Balance, Industrial Production, EU Sentix Investor Confidence, US CB Employment Trends Index, CA Housing Starts, Building Permits,

Tuesday: JN M2/3 Money Supply, Machine Tool Orders, CN CPI/PPI, AU NAB Business Confidence/Survey, IT/FR Industrial Production, FR Non-Farm Payrolls, EU GDP, Employment Change, UK BRC Retail Sales Monitor, 10-yr Auction, US 3-yr Auction, WASDE Report, Weekly API Inventories, RBNZ Debelle Speaks, US Democratic Primaries (Mini-Super Tuesday) Wednesday: AU Home Loans, SP Retail Sales, IT PPI, GE 10-yr Auction, UK GDP, Industrial/Manufacturing Production, Trade Balance, Construction Output, Autumn Budget, WR OPEC Monthly Report, US CPI, Weekly DoE Inventories, 10-yr Auction, Federal Budget Balance Thursday: JN PPI, MI Inflation Expectations, IT Quarterly Unemployment Rate, 3/7/30-yr BTP Auctions, EU Industrial Production, ECB Interest Rate Decision, ECB Staff Macroeconomic Projections, Press Conference, UK RICS House Price Balance, US Weekly Jobless Claims, PPI, 30-yr Auction Friday: JN Tertiary Industry Activity Index, GE/FR/SP CPI (F), US Michigan Consumer Sentiment (P), Import/Export Price Index, Baker Hughes Rig Count


Before I begin this week's report I would just like to say that the rise of cases and spread of coronavirus is a humanitarian issue first and foremost. So our deepest sympathy goes out to those affected by the situation. As an analyst, I would not be serving my clients if I did not comment on what remains the main issue impacting markets right now, so I shall continue to be mindful of the sensitivity of this subject.

MACRO OVERVIEW: Sunday 8th March 2020


The recent bout of record levels of volatility is set to continue this week and if Middle Eastern markets on Sunday were a litmus test for the looming US open, you can expect a significant gap down in equity and oil prices from the get go.

Coronavirus remains the dominant theme with Italy now taking the unprecedented step to quarantine 16mln people in the region of Lombardy, including its capital Milan and other cities such as Parma, Modena and Venice. The national emergency is expected to remain in place for at least four weeks, meaning major public spaces are on complete lock-down.

The same is currently being considered in Germany and neighbouring country Austria, where confirmed cases are now at 1,018 and 104 respectively and New York has now declared a state of emergency just a few hours ago.

The speed of the global spread has been rapid, but not entirely unexpected. However, it is the reality of what quarantine measures would mean for the global economy, overlaid with rising panic, evident in consumers now stockpiling for the worst case scenario, that is likely to exacerbate the problem far beyond the actual number of ill patients.

Last week the VIX exploded and the daily 1,000 point swings look set to continue in the Dow for the time being. As such, a flight to quality bid is likely to be observed right from the opening print later in gold prices, with the rates market likely to price in another 75bps cut from the Fed come March 18th.


As we had anticipated in our daily briefings, the OPEC+ deal fell through at the last hurdle causing oil prices to sink at the end of last week. To me the likelihood of Russia agreeing to Saudi's terms was always a big ask but a report in the FT now has me feeling incredibly bearish for the next 24-hrs ahead.

The Financial Times has reported that to punish the Russians for not agreeing to their deal, Saudi Arabia will raise production and offer its crude at steep discounts (20%), according to people familiar with the matter. The report goes on to suggest the Kingdom will aim to raise production to 10mbpd next month, but could eventually surpass 11mbpd.

If this is true, I think we are at a real risk of a repeat of the fateful move taken by OPEC on the 27th November 2014 (see chart below) when they took the decision to hold output steady despite a supply glut in an attempt to squeeze out the US shale producers - a move that spectacularly backfired and resulted in oil prices crashing below $30/bbl just a few months later.

We won't have to wait long to see what markets think, and with coronavirus only likely to dent sentiment even further, I recommend watching oil prices closely at the re-opening of trade on Globex this evening. As a guide, Saudi Aramco fell over 9% on the local exchange today and now trade below their IPO price for the first time.


At the end of last week I thought the ECB may be more reluctant to hold off on following the Fed's lead given their comparatively limited room for manoeuvre but having read through the press this evening I now think they don't have a choice. Therefore I look for a 10bps rate cut and targeted liquidity measures with downgrades to GDP and inflation in the latest staff macroeconomic projections.


Last week Joe Biden flipped the democratic primary race on its head by storming 'Super Tuesday' and taking a decisive lead from the previous front-runner Bernie Sanders. Michigan (125 delegates at stake), Washington State (89), Missouri (68), Mississippi (36), Idaho (20), North Dakota (14) are up next this week on the 10th in what has been dubbed 'Mini Super Tuesday'. Regardless of the result, I don't see this as a defining force for sentiment in the greater context of COVID-19, with Biden now 11.0% ahead in the RCP average (below).

If you are a stocks trader and want to see what the Amplify Trading markets desk has been looking at on a more micro level, check out this video HERE from colleague Eddie Donmez who looks at the winners, losers and how to best navigate this current storm of market volatility.

Have a good week ahead and stay safe wherever you are.

Anthony Cheung

Head of Market Analysis


Find out more about Amplify Trading HERE.

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