Daily Commentary BY THE CURVE TEAM –

Market Sell off Escalates

10th of March, 2020

In one of the most volatile market sessions since the GFC, global markets saw large losses in the past 24 hours.

Yesterday’s heavy selling began with the Asian Trading Session, which saw oil fall 25% and equities down heavily. The sell-off continued and spread globally. Locally, equities fell heavily with losses spread across almost all market sectors, with futures continuing to fall after the close of markets.

Notably, there was a flash crash in the Australian Dollar, with a fall of more than 5% during  a 20 minute window in mid afternoon. In what was rumoured to be a reoccurrence of the similar January flash crash, currency markets across the board moved violently before retracing the entire move. The AUD currently sits just shy of 0.66 US cents after touching a low of 0.6313.

Focus then shifted to the US trading sessions. During our timezone US equity futures fell heavily before hitting their overnight loss limit of -5%. At the open of the US sharemarket the losses spilled over from the futures into the physical assets. This resulted in the triggering of a trading halt for 15 minutes when the market hit its 7% stage 1 loss limit. Positively, when markets reopened after the halt the selling was not sustain with market paring back to be currently sitting down around 5.5%.

With losses having spread to the US the question is whether we will see further selling locally this morning and throughout the day.

Data updates are due today with the The NAB Business Survey out. Additionally, this afternoon Curve will be releasing the March Monthly Insight with a deeper look at where the economy was prior to the outbreak of Covid-19 and how thing may develop.

Matthew Dunshea

Client Relationship Manager