Market Report 26th March 2020

Market Report 26th March 2020 981 980 Realm
Stocks higher again as U.S. Senate leaders and the White House reach  agreement on stimulus bill. 
  • European stocks ended the session sharply higher as stocks rebounded in late afternoon trades on news that U.S. Senate leaders and the White House have reached an agreement on a $2 trillion stimulus bill.
  • US stocks moved notably higher over the course of the trading session before giving back ground going into the close. The major averages pulled back sharply in late-day trading, with the tech-heavy Nasdaq sliding into negative territory.
  • Asian stocks rallied after U.S. Senators and Trump administration officials reached an agreement on a massive economic stimulus package worth about $2 trillion to combat the economic impact of the coronavirus pandemic.

Global Macro

  • New orders for US manufactured durable goods increased 1.2% month-over-month in February of 2020, following a revised 0.1% gain in January and beating market forecasts of a 0.8% drop. Demand for transport equipment jumped 4.6%, mainly due to motor vehicles and parts and orders for electrical equipment, appliances, and componentes increased 1.3%. Meanwhile, orders fell for fabricated metal products (-1.2%), machinery (-0.5%) and computers and electronics (-0.8%). Excluding transportation, new orders decreased 0.6% while excluding defense, new orders increased 0.1%.  
  • The CBI distributive trades survey’s retail sales balance dropped to -3 in March 2020 from +1 in the previous month, still beating market expectations of -12. The coronavirus hit demand for most products, with sales of clothing, furniture and ‘other normal goods’, such as flowers, jewellery, cards etc., falling the most in the year to March. On the other hand, grocers reported exceptionally strong growth in sales volumes, as did specialist food and drink firms, as households are stockpiling groceries in response to the spread of the Covid-19 and the introduction of social distancing. Looking ahead, retail sales are expected to fall sharply in the year to April, with retailers more pessimistic than at any time since April 2009.
  • The Ifo Business Climate indicator for Germany was revised lower to 86.1 in March 2020, the lowest since July 2009, from a preliminary estimate of 87.7. It was also the steepest monthly fall since German reunification as the Covid-19 outbreak hurts businesses, jobs and overall activity. Sentiment across service providers posted the biggest fall on record (-7.6 vs 17.4 in February) and that among traders also declined sharply (-21.4 vs 1.0). In addition, manufacturing confidence dropped to -18.2 (vs -1.6 in February), the lowest since August 2009, while morale among constructors was down to 5.0 (vs 12.9 in February). Meanwhile, the Ifo institute believes that Germany’s economy could contract by between 5% and 20% this year depending on the length of the shutdown caused by the pandemic.
  • The massive stimulus package negotiated between the Trump administration and congressional is an unprecedented $2 trillion aid package designed to help the public and the economy to rebound from the coronavirus pandemic. The bill provides direct help to citizens, businesses, hospitals and state and local governments.   

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