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Market Report 6th May 2020

Market Report 6th May 2020 981 980 Realm

European markets are flat or slightly lower today as the U.S. starts to lift lockdown measures.

 

  • On Tuesday: European stocks ended with strong gains despite weak economic data, as investors made positive moves reacting to news that several countries across Europe have lifted restrictions that were in place due to the coronavirus pandemic.
  • US stocks moved mostly higher during trading extending the rebound seen over the course of the previous session. With the upward move, the major averages further offset the pullback seen late last week.
  • Asian stocks rose in thin holiday trade after several countries across the world eased Covid-19 lockdown restrictions. A rally in shares of major U.S. technology companies overnight also helped soothe worries over a recent spike in Sino-U.S. tensions over the coronavirus’ origin.

Global Macro

  • The IBD/TIPP Economic Optimism Index in the US rose to 49.7 in May of 2020 from 47.8 in the previous month, remaining in negative territory for the second consecutive month as Americans continue to feel the economic fallout from the coronavirus outbreak, particularly in the form of rapid job losses. The economic outlook gauge increased by 11.3% to 42.3 after two consecutive months of double-digit declines; and the outlook index for personal finances went up by 5.4% to 52.9 after its 18% drop in April. Meanwhile, the federal policies subindex declined by 2.4% to 53.8 in May.
  • The ISM Non-Manufacturing PMI for the US fell to 41.8 in April of 2020 from 52.5 in the previous month and higher than market forecasts of 36.8. The figure pointed to the first contraction in the services sector since December of 2009 and the sharpest since March of 2009, due to coronavirus lockdown restrictions. Declines were seen in business activity (26 from 48 in March), new orders (32.9 from 52.9) and employment (30 from 47) while prices paid increased (55.1 from 50).
  • The IHS Markit US Composite PMI was revised lower to an all-time low of 27.0 in April 2020 from a preliminary estimate of 27.4, driven by historic downturns in both the manufacturing and service sectors following the escalation of the COVID-19 outbreak. New business and employment fell at record rates. On the price front, private sector firms cut their output charges at the sharpest pace in the series history amid efforts to retain clients and revive new business.
  • The IHS Markit US Services PMI was revised lower to 26.7 in April 2020 from a preliminary estimate of 27.0, pointing 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 and employment contracted at record pace as customers postponed or cancelled orders amid ongoing global lockdowns, with new business from abroad falling the most in 11 years.
  • The US trade deficit widened to $44.4 billion in March of 2020 from a downwardly revised $39.8 billion in the previous month and in line with market expectations of a $44 billion gap. Both exports and imports were the lowest since November of 2016 and fell in part, due to the impact of COVID-19, as many businesses were operating at limited capacity or ceased operations completely, and the movement of travelers across borders was restricted.

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.