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Market Report 24th April 2020

Market Report 24th April 2020 981 980 Realm
U.S. stocks gave up early gains on Thursday to close almost flat.
  • European stocks closed higher on some brisk buying in energy, banking and auto stocks in the last couple of hours.
  • US stocks fluctuated over the course of the trading session before eventually ending the session little changed. The major averages finished the day near the unchanged line after failing to sustain an early rally. A $484 billion coronavirus aid package was passed by the U.S. House of Representatives passed which means total spending relatd to the coronavirus is nearly $3 trillion.
  • Asian stocks ended mixed even as the U.S. and Mexico kicked in more stimulus to limit the coronavirus fallout.  

Global Macro

  • Sales of new single-family homes in the United States plunged 15.4% from the previous month to a seasonally adjusted annual rate of 627 thousand in March of 2020, below a downwardly revised 741 thousand in February. It is the lowest reading since May of 2019 and the biggest drop since July of 2013. However, further declines are expected in the coming months due to the coronavirus outbreak. Sales fell in the Northeast (-41.5% to 24 thousand), the West (-38.5% to 139 thousand), the Midwest (-8.1% to 79 thousand) and the South (-0.8% to 385 thousand). There were 333,000 new homes on the market, up 2.8% from February. At March’s sales pace it would take 5.4 months to clear the supply of houses on the market. The median new house price rose to USD 321,400 from USD 310,600 a year ago. Year-on-year new home sales declined 9.5%.
  • The IHS Markit US Manufacturing PMI fell to 36.9 in April of 2020 from 48.5 in March, below market expectations of 38. The reading pointed to the sharpest contraction in factory activity in 11 years amid the cancellation or postponement of both domestic and foreign orders following the coronavirus pandemic escalation, preliminary figures showed. Production shrank at a record pace; input costs and factory gate charges both fell at the fastest rates for over a decade; factory closures and stay-at-home orders led to a marked downturn in workforce numbers. Despite lower headcounts, firms were able to reduce their backlogs of work due to a substantial drop in new orders. Finally, confidence regarding the outlook for output over the coming year dropped to a fresh low, and was pessimistic for the first time since the series began in July 2012.
  • The IHS Markit US Services PMI fell to 27.0 in April 2020 from the previous month’s 39.8, below market expectations of 31.5, a preliminary estimate showed. The latest reading pointed to the steepest fall in service sector activity since the series began in October 2009 as lockdown measures to contain the spread of Covid-19 hit consumer-facing industries particularly hard. New business dropped the most on record and employment declined at a steeper pace. On the price front, output charges posted the largest decrease since data collection began on efforts to attract clients. Looking ahead, business sentiment dropped to a fresh record low.
  • The number of Americans filling for unemployment benefits was 4.427 million last week, bringing the total reported over the past five weeks to over 26 million, equivalent to 16% of the labor force. This means that the 22 million jobs created during the employment boom which started in September 2010 were wiped out in about a month as the coronavirus pandemic swept across the US. On a non seasonally adjusted basis, the biggest increases in jobless claims were reported in California, Florida, Texas, Georgia and New York. President Trump has recently signed an executive order suspending immigration into the country, aiming to protect American workers as the economy reopens.
  • The Confederation of British Industry’s total order book balance tumbled to -56 in April of 2020 from -29 in the previous month, the lowest since July of 2009 and compared to market expectations of -53. In addition, the measure of manufacturing expectations for the next three months sank 47 points to -67; while the gauge for export orders tanked 21 points to -49. Domestic price expectations also declined. These constitute the weakest expectations on record for total new orders, domestic orders, and export orders.
  • The annual inflation rate in Hong Kong rose to 2.3% in March 2020 from 2.2% in the previous month. Transport prices increased further (1.1% from 1% in February); and cost of miscellaneous services rebounded (1.1% from -1.3%). In contrast, prices slowed for food (5.7% from 6.2%); housing (2.6% from 2.7%); and miscellaneous goods (3.5% from 4.3%). Additionally, cost dropped at a faster pace for electricity, gas & water (-16.1% from -15.9%); and clothing & footwear (4% from -3.1%). Also, durable goods prices continued to fall (-2.4%, the same as in February). On a monthly basis, consumer prices went down 0.2%, after rising 1.7% in the prior month.
  • The IHS Markit Germany Manufacturing PMI fell to 34.4 in April of 2020 from 45.4 in March, below expectations of 39, preliminary figures showed. It is the lowest reading since March of 2009, as a result of the COVID-19 pandemic and subsequente lockdown. Factory output and new orders dropped sharply and job shedding was the fastest in 11 years. On the other hand, supplier delivery times posted a record increase and stock of purchases rose. Firms’ expectations towards activity over the next 12 months remained deep in negative territory.
  • The IHS Markit Germany Services PMI tumbled to 15.9 in April 2020 from 31.7 in the previous month, well below market expectations of 28.5, a preliminary estimate showed. The latest reading pointed to the steepest month of contraction in the service sector since the series began in 1998, as a result of the COVID-19 pandemic and subsequent lockdown measures. Inflows of new work, new business received from abroad and employment all declined at a record pace. Looking ahead, business confidence was little-changed from March’s series record low.

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