Morning Market Wrap: Dow records best one-day move following Senate updates

25 Mar 2020
U.S. markets appeared to turn bullish overnight and take the lead from futures markets which had been pointing higher throughout the domestic session as updates on the progress of Senate negotiations related to a stimulus package continued to be released…

U.S. markets rallied into the close with the Dow Jones recording its best one-day point’s gain ever and best percentage gain since 1933 after climbing 2,112 points (11.37%) higher to close at 20,704 a day after dropping to levels not seen since 2016. The catalyst for the spectacular movements was an increase in market confidence that Congress will agree on a stimulus package that is set to be close to $2 trillion to offset some of the economic impacts of the coronavirus epidemic.  The jump on Wall Street comes after lawmakers on Monday twice failed to reach an agreement, sending stocks into a fresh tailspin. Senate Minority Leader Chuck Schumer noted he had “very good” discussions with U.S. Treasury Secretary Steven Mnuchin, and that an agreement was on the “two-yard line.”

The Washington Post reported that the package has confirmed $500 billion in funding for hard-hit industries and a comparable amount to send direct payments to millions of U.S. families, $350 billion in small business loans, $250 billion in expanded unemployment aid and at least $75 billion for hospitals. Previous negotiations had broken down over some of the details related to funding for hospitals and the structure and management of the $500 funding package. However, House Speaker Nancy Pelosi, Senate Majority Leader Mitch McConnell and Senate Minority Leader Chuck Schumer have all come out and voiced confidence that a deal is soon to be finalised.

The trading day ended with no concrete next steps in place, but some investors suggested the market sell-off of the past few weeks may have been overdone. Chief Investment Officer at CFRA Research, Sam Stovall, said: “even in bear markets, you can end up being oversold, and I think that this market was stretched like a rubber band that, at least in the near term, was ready to snap back”.

Another boost to market sentiment came in the form of a speech by President Trump in which he suggested the idea of restarting the economy soon to limit the damage to small and medium-sized businesses. This comes despite his key health advisers recommending a longer duration of economic shut down may be necessary. Right now health officials are trying to fight off ascendant voices around President Trump that are pressing him to restart the economy as soon as Monday to avoid severe business and job losses. However, markets appear to be ignoring the undeniable fact that the U.S. has only just begun dealing with the outbreak and see the President’s commentary as an indication that current lockdowns will not last into the third quarter.

Additionally, reports came that the outbreak was peaking in Europe, which may have provided further confidence to market bulls. In Italy, the death rate dropped for a second day and in Germany officials reported that infection rates had begun to level off.


The ASX200 climbed 189 points (4.17%) to close at 4,737 as optimism over a significant stimulus package being released in the U.S. resulted in broad gains across all sectors. As domestic markets opened, U.S. politicians were entering a second round of talks to push a near $2 trillion stimulus package through Congress. With regular updates being released throughout the trading session, domestic markets appeared to be one of the first to respond to the improving situation in the U.S.

While all sectors closed higher, Energy, Real Estate and Information Technology outperformed their peers after closing 7.63, 7.1 and 6.64 per cent higher respectively. Energy gained support from a 20.6% rally by Santos Limited (STO) and a 17.2% gain by New Hope Corporation Limited (NHC), while a 12% gain by Goodman Group (GMG) and an 18% jump by GPT Group (GPT) drove Real Estate higher.

While all sectors closed in the green, a handful of names from all different areas of the economy saw astonishing advances that significantly trumped the average movements seen during the session. Credit Corp Group Limited (CCP) surged 46% to close at $9.12, Corporate Travel Managed Limited (CTD) jumped 31.3%, and Afterpay Limited (APT) enjoyed a healthy advance and closed 26% higher at $11.21 after closing below $10 two days earlier.


*Note: These prices are based on futures and/or CFD pricing and may therefore differ slightly from spot pricing.

Commodities and Currencies

Brent Crude advanced 0.7% to $US27.22 a barrel while iron ore bounced back from declines seen a day earlier and climbed 3.6% higher to $US83.97 a tonne. Gold appeared to follow equity market movements and climbed 3.78% higher to $US1,626 an ounce.

This article was written by Thomas Brunton – Senior Equity Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3633.

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