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Market Report 12th May 2020

Market Report 12th May 2020 981 980 Realm

Markets are monitoring coronavirus numbers closely as concerns rise over a potential second wave.

 

  • On Monday: European stocks ended mostly lower amid fears of a second wave of coronavirus infections after several countries started lifting lockdown restrictions and began reopening businesses.
  • US stocks recovered from a weak open. It is worth noting that the tech-heavy Nasdaq is out-performing the Dow Jones Industrial Average by the widest margin in twenty years.
  • Asian stocks ended broadly higher as hopes of reopening of economies and signs of a coronavirus death rate in some of the world’s worst hit countries helped investors shrug off a staggering jump in U.S. job losses.

Global Macro

  • IChina’s banks extended CNY 1.70 trillion in new yuan loans in April 2020, compared to CNY 2.85 trillion in the previous month and above market expectations of CNY 1.4 trillion, as the central bank ramped up policy support aiming to support the economy from the coronavirus pandemic. Household loans, mostly mortgages, decreased to CNY 666.9 billion from CNY 989.1 billion in March, while corporate loans dropped to CNY 956.3 billion from CNY 2.05 trillion. Meantime, outstanding yuan loans grew 13.1% year-on-year, faster than a 12.7% rise in the previous month and beating forecasts of a 12.9% gain. Total social financing, a broad measure of credit and liquidity in the economy, fell to CNY 3.09 billion yuan from CNY 5.15 trillion in March, but above consensus of CNY 2.65 trillion.
  • Vehicles sales in China rose 4.4% year-on-year to 2.07 million in April 2020, the first increase since June 2018, as the country loosened coronavirus-related restrictions and reopened for business. Still, sales of new energy vehicles (NEVs), which include battery-powered electric, plug-in hybrid and hydrogen fuel-cell vehicles, fell for a tenth straight month to 72,000 units. For 2020 full year, the number will likely drop by as much as 25% if the pandemic continues. Even if China contains the outbreak effectively, the country’s auto sales are expected to decline 15% this year, from over 25 million units in 2019, the China Association of Automobile Manufacturers (CAAM) said.
  • The US and most euro zone bond yields rose on Monday, as investors anticipated further steps from policymakers to soften the economic blow of the coronavirus pandemic. Traders weighed efforts to reopen economies against concerns over the possibility of a second wave of COVID-19 that could lead to future lockdowns.

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