The MSCI Asia Pacific Index is set to notch back-to-back gains for the first time in nearly three weeks, following the US stock market’s best session in 12 years. However, with US equity futures now in the red, it reinforces the notion that risk appetite is still struggling to find a firm footing, and the advances in global equities remain tentative at best.

With global stock markets seemingly closer to the bottom than to the top at this stage, investors who have been bruised by the stunning selloff in recent weeks are now desperate for any form of comfort, with the rollout of stimulus packages across the global economy being the likeliest source. Given the Fed’s plans for unlimited quantitative easing, the eagerly-anticipated $2 trillion US economic stimulus package, and Europe’s plans to unleash credit lines to the region, global stocks may be given cause to climb higher still over the near term.

Yet, the immediate efficacy of the broad swathes of support measures remains in doubt, given that the depth and the duration of the supply and demand shocks remain far from certain at this point in time. Hence it is uncertain whether recent advances in the stock markets will stick, considering that investors are still fearing the worst over Covid-19’s eventual toll on the global economy. With the VIX still at its highest levels since the global financial crisis, investors can expect to brave through choppy waters for a while longer.

Dollar moderates … but not by much

The Dollar index (DXY) has moderated below the 102 handle, after the Federal Reserve’s announcement over its plans for unlimited quantitative easing prompted broad-based easing in the Greenback. The Fed’s recent efforts to ease the Dollar-funding crunch, after opening up swap lines with more central banks around the world, have also offered some measure of relief for the broader currency complex.

Should Congress pass the $2 trillion US economic support package, that may lead to further waning in the Greenback as risk appetite attempts a comeback. However, persisting fears over a looming global recession are expected to mitigate any near-term declines for the Greenback, considering the refuge that King Dollar offers investors during times of economic turmoil.

Gold’s revival set to kick on

Gold is seeing a resurgence after breaching the psychological $1600 level. The swathes of fiscal and monetary support packages being rolled out around the world has fueled the tailwinds in Gold, as the liquidity-related selloff gives way to a buying spree that’s more corelated with fears of an impending global recession.

Oil’s gains may slip from investors’ fingers

Brent futures continue to be suppressed below $30/bbl, and would require a fundamental revival in order to see a sustained rise. While hopes of a $2 trillion US stimulus packages may offset some of the demand-side concerns, its impact on Oil prices are expected to be limited, considering the risk of global markets being inundated with cheap supplies amid the OPEC+ price war.

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