Is the share market about to recover strongly after a number of positives?
Last week on Friday the US share market, the S&P 500 (INX), went up over 9%.
Over the weekend the US announced another large package to try to help the US economy.
The US Federal Reserve cut its interest rate target range to 0% to 0.25% and will start buying bonds, in other words quantitative easing, with a $700 billion package. The Federal Reserve said:
"The Federal Reserve is prepared to use its full range of tools to support the flow of credit to households and businesses and thereby promote its maximum employment and price stability goals."
The Federal Reserve also said that it would work with other central banks to ensure that commercial banks have enough access to funds. The Bank of England is one of those institutions that will be part of the team to lower the price and extend the maximum term of US dollar lending operations.
What's the ASX going to do today?
No-one knows what's going to happen with how volatile the market has been so far, just look at Friday with the S&P/ASX 200 Index (ASX: XJO).
Central banks and governments providing support will help lessen the falls of the share market.
You can't just predict the market would fall more than 50% and not expect central banks to do their part to try to help. They didn't spend the last decade being as cautious as possible to then drop the ball during this outbreak.
It will be interesting to see what the market does next. China's lockdown alone was going to have an effect on Australia and the world, but now we're seeing almost every major economic with rapidly rising infection numbers and steady closing of things like sporting events, schools and so on.
The thing is that the share market will predict the end of the financial problems and recover far sooner than the actual economy.
However, there could be a lot more volatility to come.
