Macroeconomic/ geopolitical developments
- In last week’s Macro Watch we highlighted the strong FOMO (Fear of Missing Out) rally across global stock averages, driven by encouraging data from Europe regarding the plateauing of the number of cases/ deaths from the coronavirus, from the relaxing of lockdown rules in some European nations and from the ongoing economic support being delivered by global Central Banks and government.
- Although the COVID-19 virus continues to spread globally, with the epicentre in the OK and US, where the number of cases and deaths continues to increase, there continues to be some sporadic encouraging data from Europe, with some plateauing of the number of cases/ deaths.
- In addition, more European nations are either relaxing or looking at relaxing lockdown rules, as are some US States.
- Yes, the global economic slowdown was once more highlighted with another VERY high Jobless Claims number in the US on Thursday, with over 22 million Americans filing for unemployment in the four weeks since the lockdown began in early March.
- BUT global Central Banks and governments continue to provide measures that are supportive of economies and these are starting to feed through to corporates and individuals.
- On the positive front in the fight against the COVID-19 virus, a hospital in Chicago using the antiviral medicine remdesivir to treat severe COVID-19 patients saw rapid recoveries in respiratory symptoms and fever, with most patients discharged in less than a week.
Global financial market developments
- The news of hope with the potential treatment for the COVID-19 virus helped global stock indices surge back higher Thursday/ Friday, with markets closing the week at or close to multi-week peaks.
- This built on the prior week’s stock surge, with the S&P 500 positing its best one-week percentage return since 1974, up 12.1%.
- In the Forex space, the US Dollar saw modest, broad strength last week, slightly decoupling from the “risk on” theme seen in the equity markets.
- The US Dollar rebound saw a setback in Gold, after the surge to a new multi-year high.
- Base metals have pushed higher alongside stocks, with the “risk on” theme seeing Copper at a new multi-week high.
- The oil price dropped again, despite the oil production cuts agreed over the Easter weekend.
Key this week
- Watching for a possible slowdown in the number of cases/ deaths from the coronavirus in Europe and the US.
- Also, awaiting further possible easings of lockdown directives in Europe and maybe in some US States.
- On the Central Bank side we get the Peoples Bank of China (PBoC) interest rate decision on Monday and the Reserve Bank of Australian (RBA) Meeting Minutes Tuesday.
- Standout data points through the week are the UK Employment report and German ZEW Survey on Tuesday, global Markit Purchasing Managers Index (PMI) data Thursday and US Durable Goods on Friday
- Earnings season continues in the US this coming week, but as of yet the earnings data in the past week have had muted impact on the broader indices.
|Date||Key Macroeconomic Events|
|20/04/20||PBoC interest rate decision|
|21/04/20||RBA Meeting Minutes; UK Employment report; German ZEW Survey|
|22/04/20||UK and Canadian inflation data (CPI)|
|24/04/20||US Durable Goods|