Welcome to Rockfort Markets and new market commentary for April 2020. I'm here with Ricardo we are both in isolation in New Zealand.
So this is where we will be doing the commentaries for the foreseeable future. What's happened in the markets over the last month, we see a lot of volatility, especially in the indices and gold but it appears that most of the products are moving in the same direction. They are highly correlated at the moment. What else can you tell us about the current situation?
Well if you're talking about volatility we haven't seen this volatility in a few years, so we're still playing about the 50% VXX or volatility so that means a lot of people are still running scared. Some are still thinking the we are still here in the long run for a big drop in the US markets and we had one last night we were down by four 4.5%, S&P, Dow Jones also Nasdaq we're also down more than 4% so a lot of people are still scared especially as Trump has decided to prolong the lockdown stage. Earlier he wanted it to be that the market should be open or people to be out by Easter right, now they have decided that it might run until end of April or might even be May so people just sold up again last night. So yeah, that's the thing that's happening in the markets right now.
Well maybe if we are able to visualize what happened over the last couple of months we can bring up the charts for a few symbols just to put everything in perspective.
Okay, the S&P 500, remember when this COVID-19 started somewhere around 23rd of January the market was still moving up towards the S&P500 was even around 3300 making new highs yeah when it started but after a while when people started to realize that this is not an ordinary virus the market has sold off practically one third, close to one-third of the value of the S&P 500 and Dow Jones they all fell the way down close to 2000, that's a big drop that's practically one third or 30% it's not only S&P so we drop all the way down here although we're seeing release rally or probably some profit-taking on those shorting the market. That's the S&P 500.
I mean, we we will see a lot of unemployment claims coming up in the next couple of weeks so, maybe this is not as you said recovery just yet. We may see a bit more downside in at least for the next couple of weeks.
We are having the weekly claims tonight right so they're expecting another 3 million-plus again in the US so that's bad.
But definitely a lot of volatility so there are a lot of opportunities as long as you're on the right side.
You can see gold right, now very choppy.
The same picture with gold I mean it obviously drops when the coronavirus started to have an impact and then dropped all the way down to roughly $1460 but then came up again was a bit of a relief rally but you can see that it has rebounded a little bit more than the indices from those lows maybe, but yeah, overall the markets and lockstep at the moment so as you can see the gold price has also dropped recently same as the indices so everyone is on the edge at the moment and that translates into this high correlation across all markets. Maybe we can also have a look at the FX markets maybe Kiwi-US?
Yeah because currencies like Kiwi-US or Aussie-US so scary currencies which should have higher interest rates those are the ones that getting a hammered right now. If you can see the Kiwi alone from 66 plus right, went down to 55 or even below 55 this is probably the last time it was here was 2007-2008. I think yeah so it's been a while since the Kiwi-US has been down here, Aussie-US the same thing it has been like a 15 year low thereabouts.
I mean it's good to see that on the chart but yeah I think the fundamental data is also now very important plus obviously new infections that's what the market will react to moving forward and you know the unemployment claims tonight will be really important for the markets obviously not very optimistic about those but we'll have to wait and see. That's the overall picture for now I mean we will be back on our weekly basis again and that's I think all from us from now, we're not wearing our masks at the moment but you've got one.
Anyway, for everyone out there I think best is to just help out and stay at home.
Yeah definitely just do what we do stay in your bubble and and then we'll get out of this. That's all from us and we'll see you next week at Rockfort Markets.