Market Analysis – March 20

Market Analysis – March 20

The stock markets failed to rebound on Friday


After a positive start to the session due to the measures adopted by governments and central banks, market sentiment faded as news about the evolution of the pandemic in the world became known.

With locked-out cities like London and some German ones, and a last hit to optimism with the closing of New York and the declaration of a state of emergency in California (it should not be forgotten that this state has a GDP similar to that of Germany) the situation grew worse.


The American Congress prepares a huge stimulus package that will reach the 1 trillion Dollar figure. The North American indices closed the session with losses, although not as high as in previous days.

A sign of hope is provided by the VIXX (CBOE volatility index) which, for the second consecutive day, has slowed its career to the upside and closed at 61.60.





This indicates that the market expectations of higher losses are lowering and may anticipate a more stable period in which the recovery of the stock markets is not very likely but could at least stabilize with slight upward corrections.


One of the most important movements took place in the fixed income market. Sovereign bonds in general but especially Treasuries experienced an unusual rise as a result of the huge amounts that central banks have allocated to their Quantitative Easing programs.

GER10YBond yield fell 15 bps and TNOTE1031bps which corresponds to a price rise of 270 ticks.


The security that these central bank interventions bring to the market is an essential element for the recovery of confidence in the market and constitutes a fundamental pillar for a future, although still distant, recovery.


In the foreign exchange market, the Dollar failed to consolidate and lost part of its previous progress in what can be considered an adjustment or correction typical of the end of the week. The lower tension in the Dollar swaps also contributed to this, thanks to the liquidity injection from the Fed and agreements with other central banks.

The British Pound recovered again in this scenario. GBP/USD rose 1.62% to 1.1650.


EUR/GBP fell for a second day with the strengthening of the Pound Sterling after reaching a peak at 0.9500 anticipating what may be a reversal pattern if in the next sessions it closes below 0.9058 which would open path towards 0.8955.


By: Miguel A. Rodriguez Ruiz


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Users/readers should not rely solely on the information presented herewith and should do their own research/analysis by also reading the actual underlying research. The content herewith is generic and does not take into consideration individual personal circumstances, investment experience or current financial situation.

Therefore, Key Way Investments Ltd shall not accept any responsibility for any losses of traders due to the use and the content of the information presented herein. Past performance is not a reliable indicator of future results.