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Market Report 7th May 2020

Market Report 7th May 2020 981 980 Realm

European stocks are higher this morning with markets focusing on latest coronavirus news and easing of lockdown measures.

 

  • On Wednesday: European stocks closed lower as investors made cautious moves amid concerns about the possible impact of any new wave of Covid-19 infection following lifting of lockdown restrictions in several places across the world. U.K. Prime Minister Boris Johnson indicated that lockdown restrictions could start to be lifted as early as Monday.
  • US stocks showed a lack of direction over the course of the trading session before eventually ending the day mixed.
  • Asian stocks ended broadly higher on Wednesday as several countries announced plans to ease lockdown measures amid falling coronavirus infection rates.

Global Macro

  • Germany’s benchmark 10-year Bund yield rose by 7bps to -0.51% on Wednesday and is set to post its biggest daily rise in a month, after it launched a 15-year bond sale via syndication for the first time since 2015. This comes after recent data showed the service sector activity contracted at a record pace during April and retail sales fell the most since at least 1991.
  • Crude inventories in the US rose by 4.590 million barrels in the week ended May 1st, 2020, following an 8.991 million increase in the previous period and compared with market forecasts of a 7.759 million advance, according to the EIA Petroleum Status Report. Meanwhile, gasoline inventories fell unexpectedly for the second straight week, down by 3.158 million.
  • Private businesses in the US fired 20.2 million workers in April of 2020, after shedding an upwardly revised 149 thousand in the previous month and slightly higher than market forecasts of 20 million. It is the biggest decline ever in employment, due to the coronavirus pandemic and the shutdown imposed. The service providing sector shed 16 million jobs, mostly in leisure & hospitality (-8.6 million) and trade, transportation and utilities (-3.44 million). Meanwhile, the goods-producing sector fired 4.22 million workers, mainly due to construction ( 2.47 million) and manufacturing (-1.67 million).
  • The European Commission expects the Eurozone GDP to shrink by 7.7% this year, before rebounding by 6.3% in 2021, saying the economy will experience a recession of historic proportions due to the coronavirus pandemic, according to the Spring 2020 Economic Forecast. Still, the Commission said that both the drop in output in 2020 and the strength of the rebound in 2021 are set to differ markedly between countries as they depend not only on the evolution of the pandemic in that country, but also on the structure of their economies and their capacity to respond with stabilising policies. Among the bloc’s largest economies, Italy and Spain are seen posting the steepest contraction rates, with the GDP falling by 9.5 and 9.4% respectively. France’s economy is forecast to shrink 8.2%, while Germany’s GDP will probably drop by 6.5%.
  • Eurozone’s retail trade tumbled 11.2% from a month earlier in March 2020, the largest decline since comparable series began in 1995 and compared to market expectations of a 10.5% plunge, as the coronavirus crisis led to restriction measures that forced businesses to close and consumers to stay at home. Sales of automotive fuel plummeted 20.8% (vs -1.2% in February) and non-food products trade slumped 23.1% (vs -0.4% in February) led by textiles, clothing, footwear; electrical goods and furniture; computer equipment, books and other; and pharmaceutical and medical goods. Online sales rose at a slower pace. Food, drinks, tobacco trade jumped 5.0%, following a 2.5% increase in the previous month.

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.