Wall Street embraced a decent rebound overnight, as dollar liquidity strain was alleviated by the Fed’s unlimited asset purchasing promise with hopes that a $2 trillion stimulus package will eventually be passed.

This, however, does not solve the underlying issue, which is the virus. Nonetheless, a technical rebound for a few days or even weeks could still provide a window of opportunity for investors to reshuffle their investment portfolio.

With severe global supply chain disruptions and a much weaker consumption demand in major economies due to increasing social distancing measures, it is hard to convince anyone that this storm is ending anytime soon.

Airlines and shale oil companies are on the frontline of the downturn, and some of them may seek government bailout in the months to come. Pay cuts and headcount freezes are already happening in Singapore Airlines and BreadTalk, and more are expected to come.

Tomorrow, Singapore will announce a supplementary fiscal stimulus package that is forecast to be at S$14-16 billion, to cushion the employment market and help the vulnerable. Singapore has also banned all bars, entertainment and large gatherings last night, in view of rising unlinked cases locally. We are in unprecedented times. Consumer sentiment could get far worse before a real recovery can be seen.

The US dollar has fallen for a fourth consecutive day, as has the volatility index. The softer dollar boosted a rebound in both gold and oil, which are trading at $1,620 and $24.5 respectively.

Technically, a Fibonacci retracement points out that S&P 500 index could head towards the 2,646 area (38.2% retracement level) before major selling pressure emerges.

US SPX 500 - Cash chart

 

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