U.S. declares national emergency, markets rally to end brutal week

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Markets soared over 9% at the tail end of Friday to cap a week of stomach-churning selling driven by coronavirus fears. Early-morning futures and initial buying pointed to a dead cat bounce in reaction to days of 10% slides. Then at 3 p.m. , U.S. House Speaker, Nancy Pelosi, that the Democrats were passing a bill to provide free coronavirus testing to Americans, two weeks of paid family sick leave, food aid and other measures with or without Trump’s or the Republicans’ blessing. It’s likely the bill will pass. Over an hour later from the White House lawn, a weary Trump himself announced his own measures by declaring a national emergency. Trump was universally scorned for his confusing speech Wednesday night that failed to comfort investors and angered Europeans for isolating them. However on Friday, Trump let a team of scientists and corporate CEOs speak in turn, each one summarizing steps they’d take in fighting the pandemic, such as Target pledging to stay open and well-stocked as panicked Americans stock up on supplies.

Both Pelosi and Trump stressed medical testing for coronavirus, which one doctor at Trump’s presentation explained led to South Korea taming the outbreak. Until now, there has been no U.S. strategy to test citizens to curb the spread of the disease. The press conference mentioned that the FDA had just rush-approved a coronavirus test developed by Roche; regulations would be waived to accelerate admission into nursing homes; time limits on hospital stays would be removed; the interest on federal students loans would be waived; and so would that on “large purchases” of federal oil reserves. During an extensive Q&A, Trump said he would consider adding the U.K. to the European travel band after a continued rise in cases there, but was pressed to get tested himself after being exposed to a Brazilian official who has tested positive. In all, the White House pledged to spend up to US$50 billion to battle the pandemic. In contrast to Wednesday’s speech, markets embraced this announcement. Markets soared in the final half hour past 9% for the day, and halving the week’s brutal losses. The S&P closed down 8.8% for the week.

In Canada, where the Prime Minister’s wife has tested positive for the virus, the TSX bounced back 9.66%, laregly recovering Thursday’s record-breaking rout. Banks on both sides of the border rocketed up, with Morgan Stanley up 19.77%, and Royal Bank rallying 14.9%. Even oil rose 5% as safe-haven gold ticked up. Tech staged a comeback with Facebook gaining 10.23% and Intel soaring 19.5%. Bond proxies in real estate and utilities were relatively weak, but there was strong buying across the board. Exhausted, the street doesn’t believe we are out of the woods, and expects more volatility as the number of American cases will surely rise. But at least some government funds, medical testing and scientific analysis are combating the pandemic, which offers a hope.