US stocks edged higher as investors gave a tepid vote of confidence to the battery of economic and financial measures from global policy makers aimed at easing the market turmoil. The S&P 500 rose 0.5% to 2,409.39 while Dow Jones was up 188.27 points (0.95%) to 20,087.19.

Fed Encouraged by Jump in Discount-window Borrowing

The Fed said it’s encouraged by the jump in borrowing from its discount window this week, as the central bank continues to try to destigmatize the seeking of emergency overnight loans by financial institutions during the coronavirus pandemic. Daily borrowing from the window averaged about US$6.7bn over the past week and stood at US$28.2bn as of Wednesday, up from US$11mn the previous Wednesday, according to figures published.

Jobless Claims, Factory Gauge Show Virus Filtering to US Data

The deep impact of the coronavirus pandemic is beginning to manifest in more US economic data. Applications for unemployment benefits jumped by 70,000 last week, the largest increase since the aftermath of superstorm Sandy in November 2012, according to the Labor Department. A separate report from the Federal Reserve Bank of Philadelphia showed a gauge of manufacturing in the region suffered its largest-ever slump in March.

Lagarde Says ECB Will Explore All Options to Support Economy

The European Central Bank (ECB) will do everything necessary to protect the euro-area economy from setbacks related to the coronavirus, including expanding on the emergency stimulus measures it announced this week, Christine Lagarde said. ECB are fully prepared to increase the size of our asset-purchase programs and adjust their composition, by as much as necessary and for as long as needed, Lagarde wrote in an op-ed published.

BOE Cuts Rates to 0.1%, Restarts QE in Latest Virus Response

The Bank of England (BOE) cut interest rates to a record-low 0.1% and added 200bn pounds (US$230bn) to its asset-purchase program in its latest emergency action to mitigate the economic impact of the coronavirus pandemic. The decision, just days into the tenure of new Governor Andrew Bailey, saw the central bank lower rates by 15 basis points and boost its quantitative easing target to 645bn pounds.

Australia Joins QE Club as First Recession in 29 Years Looms

Australia’s central bank joined the international fold with the announcement it will enter the government bond market to lower yields, having exhausted its remaining conventional policy ammunition. Governor Philip Lowe’s aims to keep three-year government bond yield at 0.25%. Lowe also cut the cash rate to 0.25%, a level he has nominated as the effective lower bound.

Indonesia Cuts Rate for Second Month to Counter Virus Blow

Indonesia’s central bank cut its benchmark interest rate for a second straight month and slashed its economic growth forecast, joining global policy makers seeking to shore up their economies amid the coronavirus crisis. Bank Indonesia lowered the seven-day reverse repurchase rate by 25 bps to 4.50%. The virus is expected to further weaken its economy, with Bank Indonesia now projecting annual growth of 4.2%-4.6% for this year, down from a previous estimate of 5%-5.4%, Governor Perry Warjiyo said.

Oil Makes Record Rebound After Trump Hints at Role in Price War

Oil surged the most ever as Trump said he could get involved in the standoff between Saudi Arabia and Russia that has rocked crude markets. Brent crude for May settlement increased US$3.59 to US$28.47 per barrel.

Source: Affin Hwang Research - 20 Mar 2020