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Market Report 3rd April 2020

Market Report 3rd April 2020 981 980 Realm
U.S. stocks higher on Thursday as oil rises sharply.
  • European stocks  ended higher after a highly volatile session, with investors reacting to news about coronavirus cases, record jobless claims in the U.S., and a whopping rise in crude oil prices amid reports suggesting a likely end to the price war in the oil market.
  • US stocks fluctuated over the course of the trading day before finish the day significantly higher. With the upward move on the day, the major averages partly offset the steep losses posted in the previous session.  
  • Asian stocks ended mixed as the coronavirus continued its punishing march, infecting over 937,000 people and killing more than 47,000 worldwide.

Global Macro

  • New orders for US manufactured goods were unchanged from a month earlier in February 2020, following a 0.5% decline in January and missing market expectations of a 0.2% growth. Demand for transport equipment jumped 4.6% (vs -1.0% in January), boosted by ships and boats (124.7% vs -69.9%), while there was a decline in orders for defense aircraft (13.3% vs -23.2%), civilian aircraft (-0.3% vs 356.8%) and vehicles (-1.0% vs 1.7%). 
  • The U.S. trade deficit dropped to near a 3-1/2-year low in February as the coronavirus pandemic pushed imports from China to their lowest level since 2009. The Commerce Department said the trade deficit fell 12.2% to $39.9 billion, the lowest level since September 2016. The%age decline was the largest since March 2018. Data for January was revised slightly to show the trade gap tightening to $45.5 billion instead of $45.3 billion as previously reported. When adjusted for inflation, the goods trade deficit tumbled $9.0 billion to $69.0 billion in February. That was the lowest since February 2015. While the smaller so-called real trade deficit is a positive in the calculation of gross domestic product, declining imports means less inventory accumulation, which could offset the contribution to GDP.   
  • More than 6.6 million Americans applied for unemployment benefits last week — doubling a record high set just one week earlier — a sign that layoffs are accelerating in the midst of the coronavirus. The stunning report Thursday from the Labor Department showed that job cuts are mounting against the backdrop of economies in the United States and abroad that have almost certainly sunk into a severe recession as businesses close across the world. Applications for unemployment benefits generally reflect the pace of layoffs. Combined with last week’s report that 3.3 million people sought unemployment aid two weeks ago, the U.S. economy has now suffered nearly 10 million layoffs in just the past several weeks — far exceeding the figure for any corresponding period on record.
  • The Caixin China General Services PMI rose to 43.0 in March 2020 from a record low of 26.5 in the previous month. This was the second-lowest reading since the survey began in 2005, amid concerns over the longevity and severity of the COVID-19 pandemic. New orders shrank at a softer pace on the back of a substantial decline in export sales. Meantime, employment fell for the second straight month and at a steeper rate, while outstanding business dropped the most since September 2015. On the price front, average input costs rose after falling substantially, driven by increased overtime payments and investment into anti-virus equipment for staff.
  • The au Jibun Bank Japan Services PMI was at 33.8 in March 2020, compared with the preliminary data of 32.7 and a final 46.8 in the prior months. This was the steepest contraction in the sector since February 2009 as the rapid spread of COVID-19 led to a plummeting in tourism and to a cancellation of major events globally. Output fell at a near-record pace, new orders shrank the most since April 2011 which was the immediate aftermath of the tsunami, and new export orders contracted at the strongest rate since the series started in September 2014. In addition, employment declined the most since July 2016, with backlogs of work dropping at the fastest rate in near nine years.
  • The IHS Markit Hong Kong PMI increased to 34.9 in March 2020 from a record low of 33.1 in the previous month. The latest reading signaled the second-sharpest deterioration of private sector conditions since the survey started in July 1998. The pace of job shedding eased from February, but was still sharp, with backlogs of work falling at a record pace. Meantime, both output and new orders plunged further, while purchasing activity and inventories declined.  

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