Macroeconomic/ geopolitical developments
- The COVID-19 coronavirus continues to spread globally, with the current epicentre still in Europe, but quickly shifting to the US.
- The British Prime Minister, Boris Johnson and Heath Secretary Matt Hancock have both tested positive for coronavirus (though symptoms are understood to be mild).
- The surge in cases in New York and the tri-state area of New York, New Jersey and Connecticut has even seen President Trump consider a quarantine of this area, to which New York State Governor stated, ‘I don’t think it’s legal’ and that it would bea ‘federal declaration of war’.
- Practically all European nations are in some form of lockdown, with restrictions on public movement and work from home rules enforced.
- Panic buying has subsided to an extent with the lockdowns, but some civil unrest is starting to surface, notably in Italy.
- Global Central Banks have slashed interest rate to or very close to 0%, with many Central Banks restarting Quantitative Easing (QE) programs.
- In addition, short-term liquidity funding for banks has been established to keep financial markets from a liquidity crisis, that was feared the prior week.
- Governments globally have introduced various fiscal stimulus and protection measures.
- The latest being the $2.2 trillion economic stimulus package passed by the US on Friday.
- The aim remains to protect businesses and workers from the inevitable economic slowdown that the lockdown restrictions will create.
- The economic slowdown has already been highlighted in the data, with a record of over three million weekly Jobless Claims number in the US on Thursday, this is Americans filing for unemployment.
Global financial market developments
- Global stock markets remain extremely volatile, with daily swings of 5-10%, but with a more positive tone seen over the past week, as the major averages have tried to form bases and recover.
- However, weak closes for global share indices on Friday have maybe signalled that this recovery effort has concluded for now.
- In the Forex space, the US Dollar has recoiled back lower against major currencies, having surged the prior week during a liquidity crisis.
- The “risk currencies”, the Australian and New Zealand, have been significant gainers in the past week.
- Moreover, the Euro and GB Pound have also shown strong recoveries versus the US Dollar, reversing much of the losses from the prior week.
- On the commodity front, Gold has surged back close to the March peak around $1700, partially due to technical supply issues in the underlying physical gold market, alongside a reaction to the weakening of the US Dollar.
- The Oil price has probed back lower, with West Texas Intermediate (WTI) oil still poised close to $20.
- Also, in the commodity space, base metals have tried to rebound, but the Copper recovery has stalled, with risks maybe turning back lower to start the week.
Key this week
- The US and European deaths from coronavirus and cases will remain in focus.
- The lockdown policies put in place by governments will also need to be monitored.
- Government support for financial markets, businesses and individuals will also stay under scrutiny.
- The overall functioning of the financial markets will be important too, of particular concern remain pressures in the stock and liquidity markets.
- The weak oil price also remains important to monitor going forward.
- Data is becoming more relevant again, with Thursday’s US Jobless Claims number a key focus, alongside global Purchasing Managers Index (PMI) data on Wednesday and Friday and the always important US Employment report, also Friday
|Date||Key Macroeconomic Events|
|31/03/20||UK GDP; German Unemployment|
|01/04/20||Global Markit Manufacturing PMI; US ISM Manufacturing PMI|
|2/04/20||US Jobless Claims|
|03/04/20||Global Markit Services & Composite PMI; US Non-Manufacturing ISM PMI; US Employment report|