Markets positive as governments look to ease lockdowns

Intermediate

Macroeconomic/ geopolitical developments

  • European nations and some US States are looking at or starting to relax lockdown measures and begin to partially reopen their economies.
  • This is as data regarding the number of new cases and deaths from the COVID-19 coronavirus virus have plateaued and even declined in some instances.
  • However, some European nations have seen this data rising again, with concerns that easing lockdowns too quickly will create a second wave of cases and deaths.
lockdown eased
  • On a positive note, further trials of the antiviral medicine remdesivir to treat severe COVID-19 patients have seen positive results in new trials.
  • The macroeconomic data has been mixed, with some data beating the significantly lowered consensus numbers in some instances, whilst worse than in others.
  • On the earnings side, markets have taken hope from some of the bigger US corporates posting better than anticipated results for Q1, though Q2 and 2020 future guidance has been vague.
  • Central banks were in play last week, with the Bank of Japan, US Federal Reserve and European Central Bank all committing to ongoing easy monetary policy and accommodative policies. However, their impact on markets was somewhat muted.

Global financial market developments

  • The key development in markets last week was the rally in global stocks, with the major global averages breaking above mid-April peaks to multi-week highs, with many of the major global indices positing their best single month moves for multiple years, even decades.
  • However, month-end and the start of May saw share indices post corrective setbacks.
  • This oil price has rebounded and stabilised after the plunge the prior week.
Oil chart
  • In the Forex space, “risk currencies” rallied and then corrected back lower through month-end, whilst the Euro has surged against most currencies through the turn of month.
  • Base metals pushed higher, with Copper prodding to a new multi-week high, though again setting back through month-end.

Key this week

  • Central Banks activity sees the Reserve Bank of Australia (RBA) meeting on Tuesday and Bank of England (BoE) meeting Thursday.
  • Macroeconomic data of note includes; European Markit Manufacturing Purchasing Managers Index (PMI) Monday, UK Markit Services PMI and US Institute of Supply Management (ISM) Non-Manufacturing PMI on Tuesday, European Services PMI and US ADP Employment change on Wednesday, China trade data, German Industrial Production and US Jobless Claims Thursday, US and Canadian Employment reports on Friday.
  • Earnings season slows down this coming week but with standouts; Walt Disney, Total (Fr) and PayPal.
  • Monitoring the number of cases/ deaths from the coronavirus and updates on lockdown directives in Europe and US States.
  • UK markets closed on Friday 8th May for national holiday.
DateKey Macroeconomic Events
04/05/20European Markit Manufacturing PMI
05/05/20RBA meeting and interest rate decision; UK Markit Services PMI; US ISM Non-Manufacturing PMI
06/05/20European Services PMI; US ADP Employment change
07/05/20BoE meeting and interest rate decision; China trade data; German Industrial Production; US Jobless Claim
08/05/20US and Canadian Employment reports; UK Markets closed for national holiday

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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