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Market Report 20th May 2020

Market Report 20th May 2020 981 980 Realm

European stocks are lower this morning with markets focusing on latest coronavirus developments.

 

  • On Tuesday: European stocks ended mostly lower, as investors stayed cautious after recent strong uptick and looked for further news on coronavirus vaccine and digested the latest batch of economic data and corporate news.
  • US stocks turned in a lackluster performance throughout much of the trading session on Tuesday before coming under pressure going into the close. The major averages all moved to the downside, partly offsetting the strong gains posted in the previous session.
  • Asian stocks rose as investor’s cheered “positive” phase one results for a potential coronavirus vaccine and hoped that the reopening of business across the world will aid an economic recovery.

Global Macro

  • Housing starts in the US plunged 30.2% month-over-month to an annualized rate of 0.891 million in April of 2020, below market forecasts of 0.927 million. It is the lowest reading since February of 2015 due to the coronavirus pandemic. Starts for the volatile multi-family segment slumped 40.3% to 0.234 million while single-family housing which is the largest share of the housing market, went down 25.4% to 0.65 million.
  • Construction output in the Euro Area plunged 15.4% year-on-year in March of 2020, following a revised 0.2% increase in the previous month. This was the steepest downturn in construction activity since February of 2012 when it shrank 15.7%. Building activity declined 15.2%, after dropping 0.1% in February; and civil engineering works slumped 17.2%, following a 2% rise in the previous month. Among Eurozone’s largest economies, construction output fell in France (- 41.2%), Italy (-35.4%) and Spain (-15.5%), but increased in Germany (5.1%).
  • The ZEW Indicator of Economic Sentiment for Germany climbed 22.8 points from the previous month to 51.0 in May 2020, the highest reading since April 2015 and well above market expectations of 32.0. Investors grew optimistic about a possible economic turnaround from summer onwards and saw activity growth to pick up pace again in the fourth quarter of 2020, although the catching-up process will take a long time. Meanwhile, the assessment of the current economic situation continued to worsen, with the corresponding indicator dropping 2.0 points to -93.5.
  • The seasonally adjusted unemployment rate in Hong Kong jumped to 5.2% in the three months to April 2020 from 4.2% in the previous period. It was the highest jobless rate since the three months to October 2010, amid the coronavirus crisis. The number of unemployed persons increased by around 40,300 to 202,500 and the number of underemployed rose by around 35,800 to 118,600. Meantime, the number of employed dropped by around 62,600 to 3.66 million while the labour force declined by around 22,400 to 3.86 million.

Disclaimer:  ‘Where the business has expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. The information contained within this communication is believed to be reliable but Realm Investment Management Limited does not warrant its completeness or accuracy. This communication is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell investments.