From the sublime to the ridiculous. A day after oil futures hit 18-year lows, they have enjoyed the biggest ever one day rise – nearly 24%.
While the record rise was made easier by the low base that oil prices had fallen to – just above $US20 a barrel – it was nevertheless a welcome respite for battered traders, energy firms and others in the path of the clash between Saudi Arabia and Russia and the COVID-19 virus.
The US dollar fell, the Aussie climbed back over 57 US cents as the sell-off in bond markets eased.
That saw yields drop after the Fed set up a special fund to handle the funding of money market funds which have been driving the bond sales to generate cash to return to their investors.
The jump in oil came off the back of more moves by global central banks and governments to support the global and individual economies with a series of new measures.
That helped to ease worries about the slowdown in energy demand and came despite a big jump in virus infections and deaths in the US and another surge in fatalities in Italy.
As a result of the April West Texas Intermediate crude contract, the US marker, rose $US4.85, or 23.8%, to settle at $US25.22 a barrel in New York. That was the largest one-day, front-month percentage climb on record based on data going back to March 1983, according to Marketwatch.com.
On Wednesday, the WTI contract plunged more than 24%, to settle at $US20.37 a barrel. It finished up, for the lowest finish since February. 20, 2002.
In Europe, the global benchmark May Brent crude contract saw a more modest $US3.59 gain to settle at $US28.47 a barrel. On Wednesday, the contract fell $US3.85, or over 13%, to finish at $US24.88 a barrel for its lowest settlement since May 8, 2003.
Gold prices also rose, recovering some ground lost in previous sessions. They settled higher on the day but then dipped by around $US5 an ounce in after-hours trading. then turned tail and was up around $US4.50 at 7 am on top of the higher settlement.
Comex gold for April delivery settled at $US1,479.30 an ounce, up to $US1.40, or 0.09% on Thursday, after posting a decline of over 3% the day before.
Comex May silver futures rose 36.2 cents, or 3.1%, to $US12.134 an ounce following a loss of 5.8% on Wednesday.
Among other Comex metals, May copper rose 1.6% to $US2.1855 a pound.
Iron ore prices dipped 35 US cents to $US91.36 a tonne, according to Metal Bulletin data.
The rise in investor confidence came after the US Federal Reserve announced a new Money Market Mutual Fund Liquidity Facility, or MMLF, to assist money-market funds in meeting demands for redemptions by households and other investors.
These funds have been selling US treasury bonds and notes and corporate bonds by the tens of billions to raise cash and driving up long term bond yields (including Australia’s). Now the Fed will operate a fund to provide cash rather than continue to sell bonds.
The European Central Bank on Thursday revealed a new program that would allow it to buy 750 billion euros ($US820 billion) in government and private sector bonds as well as commercial paper. Separately, the Bank of England trimmed its bank rate by 15 basis points to 0.1% and expanded its bond-buying plan by 200 billion pounds.
