Market Report 19th May 2020

Market Report 19th May 2020 981 980 Realm

Stocks rose sharply on Monday on optimism about a gradual reopening of businesses around the world.

 

  • On Monday: European stocks ended higher on Monday, with investors picking up stocks, reacting positively to news about Italy, New York and Spain moving to ease quarantine restrictions and reopening more businesses.
  • US stocks Following the sharp pullback seen last week, stocks moved significantly higher over the course of the trading session on Monday. The major averages all showed strong moves to the upside on the day.
  • Asian stocks rose as higher commodity prices and optimism about a gradual reopening of businesses around the world helped investors shrug off fears of a renewed trade row between the United States and China.

Global Macro

  • Natural Gas remained highly volatile in May, starting the month trading above $2/MMBtu for the first time since midMarch, but losing some momentum to around $1.8/MMBtu. The International Energy Agency said that global natural gas demand is on track to drop by a record 5% in 2020 due to the economic impacts of the coronavirus. Still, a recent dramatic plunge in crude prices forced US shale producers to shut down production, while a levelling of demand due to an easing of lockdowns and restrictions pushed prices higher.
  • The Euro jumped to trade above $1.09 on Monday after Germany and France called for the creation of a €500 billion Recovery Fund for countries and regions hit by the coronavirus crisis. In a joint statement, the two countries said they were proposing to allow the European Commission to borrow money in the financial markets in the EU’s name, in what seems to be the first step to issue joint European debt. The fund would be added to the European Union’s budget. Earlier in the session, the Euro was already rising as investors turned to riskier currencies following news that Moderna experimental vaccine to treat COVID-19 has had positive results during its first human trial.
  • Fitch Ratings changed on Friday 15 May 2020 France’s sovereign credit rating outlook to negative from stable and affirmed the debt grade at AA, citing as main trigger behind the revision the substantial worsening in public finances and economic activity expected this year due to the COVID-19 pandemic. Standard & Poor’s credit rating for France stands at AA with stable outlook. Moody’s credit rating for France was last set at Aa2 with stable outlook. DBRS’s credit rating for France is AAA with negative outlook.
  • The Fed left the target range for its federal funds rate unchanged at 0-0.25% on April 29th and reiterated it is committed to using its full range of tools to support the economy hit by the coronavirus crisis. Policymakers said that the ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term. The Fed has also taken radical steps to shore up the economy, including $2.3 trillion in loans to support households and employers; expanding the scope and eligibility for the Main Street Lending Program, and raising its holdings of Treasury securities by at least $500 billion and its holdings of agency mortgage-backed securities by at least $200 billion.

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