Despite strong pessimism when the US cash markets opened last night (9 March), some market recovery was observed early this morning (10 March). US President Trump floated a payroll tax cut and substantial relief for industries that have been hit by the COVID-19 epidemic – a reversal on his previous statement on the need for economic stimulus.
US Treasury Secretary Mnuchi also gave commitment to use all tools for the economy. More details on the economic steps are due to be announced tonight.
Potential fiscal policies, coupled with existing monetary stimulus seem to have soothed market jitters. The sell-off occurrence yesterday did not prolong as oil prices bounced off its low, keeping the US futures market buoyant. Cautious sentiments still remain as the key risks attributed to COVID-19 are still present. Economic repercussions will follow from Italy’s decision to enter a nationwide lockdown.
Despite the cushioning of the sell-off the day before observed earlier, more volatility could persist in the markets today.
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