Market Report 21st April 2020

Market Report 21st April 2020 981 980 Realm
Equities held up relatively well on Monday as the price of oil crashed below zero for the first time in history.
  • European stocks shrugged off a mid-session setback and ended modestly higher thanks to some spirited buying in the final hour.
  • US stocks moved mostly lower over the course of the trading session partly offsetting the strong gains posted last week. The major averages all finished the day firmly in negative territory. 
  • Asian stocks ended broadly lower as investors braced themselves for a busy week of corporate earnings reports and economic data.  

Global Macro

  • Oil recovered some ground during the Asian session to trade around $1 per barrel as the US benchmark’s May contract is due to expire later today. Prices crashed below zero for the first time in history, as the coronavirus pandemic has caused global demand to collapse and any buyers were willing to take delivery of crude because there is no place to store it. The settlement price for WTI crude on Monday was -$37.63.
  • The Chicago Fed National Activity Index (CFNAI) in the US plunged to -4.19 in March of 2020 from a downwardly revised 0.06 in February, reaching the lowest since January of 2009. All four broad categories made negative contributions in March, led by production-related indicators (–2.72) and employment-related indicators (–1.23). The three-month moving average, CFNAI-MA3, decreased to –1.47 in March from –0.20 in February.
  • Fitch Ratings downgraded Hong Kong’s sovereign credit rating to ‘AA-‘ from ‘AA’ with a stable outlook on April 20th 2020, citing the negative impact of global pandemic on the already fragile economy after several months of social unrest. The agency said that the social distancing efforts to contain the virus spread have led to a contraction in economic activity and a rise in unemployment, prompting policymakers to announce the most expansionary budget in the territory’s history. The downgrade also reflects Fitch’s view that Hong Kong’s gradual integration into China’s national governance system and the associated rise in economic, financial, and socio-political linkages with the mainland justify a closer alignment of their respective sovereign ratings.
  • Imports to the Euro Area dropped 1.0% from a year earlier to EUR 166.3 billion in February 2020, due to a decline in purchases of machinery and transport equipment (-2.1%), mineral fuels, lubricants and related materials (-11.2%), and manufactured goods classified chiefly by material (-7.1%).

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