General “risk on” theme continues, as lockdown easing begins

Intermediate

Macroeconomic/ geopolitical developments

  • European nations and some US States continue to relax lockdown measures and have started to reopen their economies in early May.
  • The number of new cases and deaths from the coronavirus virus, COVID-19 continues to decline in many nations and have plateaued elsewhere.
covid deaths
  • The macroeconomic data continues to deteriorate across the globe, with the US Employment report the standout this week, with the Unemployment rate at 14.7% and the Non-Farm Payroll number at 20.5 million jobs lost for April.
non-farm payrolls
  • However, some data has beaten the significantly lowered consensus numbers in some instances, notably some of the Purchasing Managers Index (PMI) data in the past week.
  • Earnings season has for the most part come and gone, with no aggressively negative shocks, though Q2 and 2020 future guidance have been vague.

Global financial market developments

  • The “risk on” theme continues with early May seeing a rebound rally in global stocks, with major global averages reinforcing the previous advances above mid-April peaks to approach multi-week highs.
  • This comes after April saw many of the major global indices positing their best single month moves for multiple years, even decades.
  • This oil price continues to rebound, having stabilised after the aggressive plunge in April.
  • In the Forex markets, the “risk currencies” continue to advance, with the Australian, New Zealand and Canadian Dollars gaining versus the US Dollar, echoing the “risk on” environment in the stock world.
  • Base metals pushed higher again as Copper prodded to a new multi-week high, again echoing the “risk on” theme.
Copper chart

Key this week

  • As ever, the number of cases and deaths from the coronavirus, alongside updates on lockdown directives in Europe and US States will be closely watched.
  • A light week for data and Central Bank activity.
  • Macroeconomic data of note includes; US Consumer Price Index (CPI) Tuesday, UK Industrial Production and Gross Domestic Product (GDP) Wednesday, the Australian Employment report, German CPI and US Jobless Claims on Thursday, then Chinese Industrial Production & Retails Sales, German GDP, US Retails Sales and Michigan Consumer Sentiment all to end the week Friday
  • Central Banks activity sees the Reserve Bank of New Zealand (RBNZ) meeting on Wednesday, plus various Federal Reserve speakers through the week.
DateKey Macroeconomic Events
11/05/20Nothing of note
12/05/20US CPI
13/05/20RBNZ meeting; UK Industrial Production and GDP
14/05/20Australian Employment report; German CPI; US Jobless Claims
15/05/20Chinese Industrial Production & Retails Sales; German GDP; US Retails Sales; Michigan Consumer Sentiment

Editor in chief

Steve Miley has 29 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Market Chartist, the Editor-in...continued

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