Market Report 1st April 2020

Market Report 1st April 2020 981 980 Realm
European stocks and U.S. futures lower this morning.
  • European stocks  ended higher on Tuesday after a highly volatile session, as investors weighed the latest economic data out of China, and reports showing continued surge in coronavirus infections and fatalities in the U.S. and some parts of Europe.
  • US stocks recovered from initial weakness but moved back to the downside over the course of the trading session.
  • Asian stocks  ended mixed as upbeat economic data from China and Japan partially offset investor worries about the spread of the coronavirus.

Global Macro

  • Factory activity in China unexpectedly expanded in March from a collapse the month before, but analysts caution that a durable near-term recovery is far from assured as the global coronavirus crisis knocks foreign demand and threatens a steep economic slump. China’s official Purchasing Managers’ Index (PMI) rose to 52 in March from a plunge to a record low of 35.7 in February
  • The Federal Reserve announced a new facility that will allow foreign central banks to temporarily swap holdings of US Treasury debt for US dollars. Amid the cash crunch and increased demand for dollars caused by the uncertainty around the coronavirus pandemic, the Fed’s “FIMA repo facility” will allow central banks to exchange US Treasury debt for cash, rather than selling them for bargain prices. 
  • U.S. consumer confidence fell less than expected in March even as the country grappled with the coronavirus pandemic, which has upended life for Americans. The Conference Board said its consumer confidence index decreased to a reading of 120.0 this month from an upwardly revised 132.6 in February. Economists polled by Reuters had forecast the index falling to 110.0 in March from the previously reported reading of 130.7 in February.
  • The Caixin China General Manufacturing PMI jumped to 50.1 in March 2020 from a record low of 40.3 in February, easily beating market consensus of 45.5. Output rose slightly as more firms reopened following widespread shutdowns and travel restrictions in February amid the COVID-19. outbreak. Also, buying activity went up, amid reports of material shortages and greater reliance on current inventories. Meanwhile, demand remained fragile, with new orders falling for the second straight month and export sales shrinking sharply. Employment, meantime, fell further, while capacity pressures persisted. The rate of backlog accumulation was sharp, despite softening from the previous month. Supply chains remained under pressure, lengthening at the second-quickest rate in just over 12 years. Prices data showed input costs fell for the first time since August last year, with firms cutting their selling prices. Finally, sentiment held close to February’s five-year high.
  • The au Jibun Bank Japan Manufacturing PMI was at 44.2 in March, compared to a flash reading of 44.8 and a final 47.8 in February. This was the steepest contraction in the sector since April 2009, amid a deepening virus crisis that stoke fears over a recession. Output fell the most since the aftermath of the tsunami in April 2011; and firms reported an aggressive drop in new orders from the previous month, reflecting lower client demand in domestic and external markets. Also, employment fell for the first time since September 2015, though the rate of job shedding was marginal, while supplier delivery times lengthened markedly, deteriorating since May 2011. On the cost front, there were deflationary trends across both input costs and output charges. Looking ahead, manufacturers reported the most negative outlook for output over the coming 12 months since data began in July 2012.

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