March 25th, 2020

Wednesday 25 March 2020

To recap, the Fed measures include an unlimited Quantitative Easing programme in addition to direct financing of large corporations through the subscription of bonds directly by the Fed.

Overnight, official confirmation arrived that an agreement was reached in the US Senate with the Trump Administration for a 2 trillion dollars stimulus deal - this represents about 10% of the US GDP.

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Early estimates indicate that such a stimulus plan could reach 4 trillion US dollars. This action is intended to avoid mass corporate 

On the downside however, we are now beginning to see real evidence of how acute the impact of the pandemic could be on global economies. The March Purchasing Directors' indices (PMIs) just published in the Eurozone, the United Kingdom and the United States.  The impact on SMEs of services is particularly sharp, with the Eurozone at 28.4 versus 39 expected, the UK at 35.7 versus 45 expected and the US at 39.1 versus 42 expected. (It should be noted that the SME indices are often seen as a barometer for the market, where a value above 50 indicates economic expansion and below 50 a contraction.)

How the Markets Performed Yesterday

Good start to the day with encouraging news from the Asian markets, as the Japanese Nikkei 225 closed +7.1%, Korea doing even better at +9% and all the other Far East markets following suit with positive performances of between +2.5% and +5.7%.

This positive tone extended to European Equity markets, which opened at around +4%, falling in line with the very positive opening and upswing seen on Wall Street. European markets closed with solid increases: the Eurostoxx50 index saw an increase of +9.2%, the Italian FTSE MIB was up by +8.9%, the French CAC 40 by +8.4% and the English FTSE 100 by +9%.

In the US, the S&P 500 index closed in very positive territory at +9.4% and the Dow Jones Industrials saw its best daily performance since 1933, closing at +11.4%.

In Fixed Income, yields on the 10-year US Treasury rose slightly by around 8 basis points to 0.85%, while yields on the 10-year German Bund remained virtually unchanged at -0.34%. Some calm has also been restored to the corporate credit bond markets after the difficult days seen last week.

Finally, there was little change in oil. Brent remains around 27 dollars per barrel, while gold took another leap to 1,627 dollars per ounce (+4.8%) as a result of manoeuvres by central banks that are flooding the markets with liquidity and fears of possible closures of mines in South Africa as a precaution against the spread of the virus.

Today’s Opening Bell

This morning, on the back of Wall Street positivity and thanks to the fiscal agreement reached in the US, the positive tone in Asian markets continues for the second consecutive. Australia closed up by +5.5%, while in Japan the Nikkei 225 jumped by +8%, again thanks to the support of the BOJ that is buying ETF shares. Korea also performed well at +5.3%, Singapore at +3.4%, Hong Kong at +3% and China at +2.75%. Openings up 1% for European futures while the future on the S&P 500 is slightly down. 

Our Outlook

•Ultimately, it is too soon to declare the crisis in the financial markets over.

•However, the joint actions of Central Banks and Governments provide a glimmer of light at the end of the tunnel. The hope is that once peak contagion has passed, the markets should be ready to start again.

•We expect volatility will remain high in the coming weeks - prudence, patience and confidence are recommended.


Unless otherwise stated, all information contained in this document is from Amundi Asset Management and is as of 25 March 2020. Diversification does not guarantee a profit or protect against a loss. The views expressed regarding market and economic trends are those of the author and not necessarily Amundi Asset Management, and are subject to change at any time based on market and other conditions and there can be no assurances that countries, markets or sectors will perform as expected. These views should not be relied upon as investment advice, as securities recommendations, or as an indication of trading on half of trading on behalf of any Amundi Asset Management product. There is no guarantee that market forecasts discussed will be realised or that these trends will continue. These views are subject to change at any time based on market and other conditions and there can be no assurances that countries, markets or sectors will perform as expected. Investments involve certain risks, including political and currency risks. Investment return and principal value may go down as well as up and could result in the loss of all capital invested. This material does constitute an offer to buy or a solicitation to sell any units of any investment fund or any services.

Date of First Use: 25 March 2020

Doc ID: 1129874

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Latest News

Latest From the Markets : 31st March 2020

China has just published its PMIs (Purchasing Managers Indices) for March. The good news is that both indices are around 52, i.e. above the threshold of 50, which separates expansion from contraction, showing that the recovery in the production of goods and services in China is underway. The data should be considered carefully, however, because a return to production in March may well be counterbalanced by the slowdown in global demand elsewhere, so we cannot extrapolate a positive trend in the near future. However, the data is above the forecasts, which expected to see the PMI manufacturing index at 45, so that is good news.