Market Report 25th March 2020

Market Report 25th March 2020 981 980 Realm
Dow records its biggest % gain since 1933. 
  • European stocks ended on a high note riding on U.S. Federal Reserve’s extensive asset purchase scheme, and on hopes the U.S. Congress will eventually agree on the proposed near $2 trillion relief package that would help limit the economic impact of the COVID-19 pandemic.
  • US stocks moved sharply higher over the course of the trading day partly offsetting the significant weakness seen in recent sessions. After ending the previous session at its worst closing level in over three years, the Dow recorded its biggest % gain since 1933.
  • Asian stocks posted strong gains after the U.S. Federal Reserve said it would purchase an unlimited amount of Treasuries and mortgage-backed securities, a move that will help reduce currency and credit risks amid fears of a virus-induced global recession.

Global Macro

  • The IHS Markit US Services PMI plummeted to 39.1 in March 2020, missing market consensus of 42 and signalling the fastest contraction in business activity since comparable series began over a decade ago, a preliminary estimate showed. New business decreased by the most since late-2009, as both domestic and foreign client demand weakened hurt by the coronavirus outbreak. In addition, employment fell at the sharpest pace since last October. On the price front, input prices and output charges declined in March. Looking ahead, companies expect output to be unchanged over the coming 12 months as COVID-19 uncertainty weighed on confidence, representing the gloomiest outlook yet recorded by the survey.
  • The IHS Markit/CIPS UK Composite PMI tumbled to 37.1 in March 2020, signalling the fastest downturn in private sector business activity since the series began in January 1998. The latest reading came in also below market expectations of 45.1. Business activity across the service economy contracted at the fastest pace on record as emergency public health measures to halt the spread of coronavirus caused demand to slump. Manufacturing production also dropped sharply during the month, with output falling by the most since July 2012.
  • Sales of new single-family homes in the United States dropped 4.4% from the previous month to a seasonally adjusted annual rate of 765 thousand in February of 2020, below an upwardly revised 800 thousand in January which was the highest since May of 2007. Figures came below market forecasts of 750 thousand. Sales fell in the West (-17.2% to 222 thousand) and the Midwest (-7.3% to 89 thousand) but rose in the Northeast (38.9% to 50 thousand) and the South (1% to 404 thousand). There were 319,000 new homes on the market, down 0.9% from January. At February’s sales pace it would take 5 months to clear the supply of houses on the market. The median new house price rose to USD 345,900 from USD 320,800 a year ago. Year-on-year new home sales jumped 14.3%.

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