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Market Report 7th April 2020

Market Report 7th April 2020 981 980 Realm
On Monday U.S. stocks recovered last week’s losses and U.S. index futures are higher this morning with European stocks.
  • European stocks  rose sharply after reports showed a drop in new coronavirus cases and deaths in several hot spots in Europe over the weekend.
  • US stocks: After moving sharply higher early in the session, stocks saw further upside over the course of the trading day. With the rally on the day, the major averages more than offset the steep losses posted last week.    
  • Asian stocks  rose broadly after the reported death tolls in some of the world’s coronavirus hot spots showed signs of easing over the weekend.

Global Macro

  • Investors will continue to assess the impact of Covid-19 on the global economy, while the FOMC meeting minutes will also dominate the news. In addition, major oil producers are expected to agree on a crude output cut to stabilize the market, and the Eurogroup is set to unveil a coordinated fiscal response to the coronavirus crisis. Elsewhere, the RBA and the BoK will be deciding on interest rates, while important releases include the US inflation and consumer sentiment; UK monthly GDP; Germany factory orders; China inflation data; Japan machinery orders and consumer morale; and Australia foreign trade.  
  • Germany’s industrial orders dropped by 1.4% month-over-month in February 2020, compared with market expectations o a 2.4% fall and after a downwardly revised 4.8% growth in the previous month. Foreign orders fell by 3.6%, due to lower demand from both the Euro Area (-5%) and other countries (-2.7%). In contrast, domestic orders grew by 1.7%. By category, demand contracted for capital goods (-3.4%), while increased for both consumer (1.7%) and intermediate goods (0.9%).
  • The US unemployment rate jumped to 4.4% in March 2020, the highest since August 2017 and well above market expectations of 3.8%, as the Covid-19 crisis threw millions out of work. The number of unemployed increased by 1.35 million to 7.14 million, while the number of employed declined by 2.99 million to 155.77 million.
  • The ISM Non-Manufacturing PMI for the US fell to 52.5 in March of 2020 from 57.3 in the previous month and beating market forecasts of 44. Still, the figures pointed to the weakest expansion in the services sector since August of 2016 and the largest monthly drop in the headline PMI since September of 1997 mainly due to supply problems related to the coronavirus.
  • Oil prices rallied on Friday, after posting its best day ever on Thursday amid hopes of a global supply cut of about 10 million barrels per day after OPEC+ announced a virtual meeting scheduled for Monday. Meantime, Russian President Putin said that Moscow was worried about the energy situation and wants join action on the oil markets. WTI crude jumped 11.9% to settle at $28.34 per barrel, while Brent rose 13.9% to settle at $34.11 per barrel. For the week WTI increased 31.8%, its best week on record back to the contract’s inception in 1983; while Brent crude went up 36.8%, also its biggest weekly gain in the contract’s history.

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