Market Report 15th April 2020

Market Report 15th April 2020 981 980 Realm
Stock-markets higher on Tuesday on coronavirus reports.
  • European stocks ended mostly higher reacting to reports showing the number of new infections due to the coronavirus pandemic saw a decline in several hot spots in Europe and that a few countries including Spain and Italy are likely to lift some restrictions.
  • US stocks Following the mixed performance seen in the previous session, stocks moved sharply higher over the course of the trading day. With the strong upward move on the day, the major averages reached their best closing levels in over a month.
  • Asian stocks posted strong gains as a flattening of the coronavirus curve pointed to the slowing of the spread of the disease globally. Encouraging exports and imports data from China also helped ease fears of a deep global recession.  

Global Macro

  • The world economy is expected to shrink 3% in 2020, the worst year since the Great Depression of the 1930s and compared to a 0.1% contraction seen in 2009, amid efforts to contain the coronavirus outbreak, the International Monetary Fund said in its latest forecast. IMF chief economist Gita Gopinath also said that the global economy is set to rebound by a strong 5.8% next year, with the level of economic activity still projected to remain below the previous estimates for 2021.
  • Import prices in the US fell 2.3% from a month earlier in March of 2020, following an upwardly revised 0.7% decline in February and compared to market expectations of a 3.2% fall. It was the largest decline in import prices since January of 2015, mainly due to a 26.8% plunge in fuel prices, namely a 27.8% drop in petroleum which was the biggest decline since November of 2008. Excluding fuel, import prices were unchanged in March as lower cost for consumer goods and foods, feeds, and beverages offset advancing prices for automotive vehicles, nonfuel industrial supplies and materials, and capital goods. Year-on-year, import prices dropped 4.1%, the biggest decrease since June of 2016. 
  • Export prices in the US dropped 1.6% from a month earlier in March 2020, following a 1.1% fall in February and compared with market expectations of a 1.9% decrease. It was the largest decline in export prices since January 2015, as cost of both nonagricultural (-1.5% vs 1.1% in February) in particular nonagricultural industrial supplies & materials, consumer goods and nonagricultural foods; and agricultural exports fell (-1.4% vs -2.7%), namely other animal feeds, vegetables, nuts, cotton, and wheat. Year-on-year, export prices went down 3.6%, the largest decrease since May 2016, after falling 1.3% in the prior month.
  • Consumer prices in the United Arab Emirates decreased 1.3% year-on-year in February of 2020, the same pace as in the previous month. This was the fourteenth straight month of deflation, amid lower prices of housing (-4.6% vs -4.9% in January); miscellaneous goods & services (-4.2% vs -0.8%); textiles, clothing & footwear (-4.8% vs -7%); restaurants & hotels (-0.7% vs -2.9%) and furnishings (-2.8% vs -2.2%). Meantime, inflation slowed for recreation & culture (10.7% vs 15.9%) and transport (3.1% vs 3.8%). Conversely, prices rebounded for food & beverages (0.5% vs -1.7%). On a monthly basis, consumer prices went down 0.3%, after dropping 0.1% in the previous month.

Disclaimer:  ‘Where the business has expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. The information contained within this communication is believed to be reliable but Realm Investment Management Limited does not warrant its completeness or accuracy. This communication is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell investments.