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Kristal Weekly Feed | 04th May 2020
These are tough times and it can get difficult to understand and analyze major events around the globe and how they affect your investments. In our weekly market update, we help you slice and dice the latest news updates to make informed investment decisions.
Headlines this week:
- This week, the number of confirmed Covid-19 cases crossed the 3.4 million mark.
- Around the globe, markets were upbeat due to the possible easing of lockdown restrictions. The investor sentiment was optimistic in anticipation of businesses returning to normal.
- Another boost was news reports about positive data regarding the Remdesivir drug trials. A detailed report is expected soon.
- In April, most markets managed to recover some losses incurred during March 2020.
- Earnings reports and unemployment claims kept the markets in check.
Covid-19 now has 3,498,733 confirmed cases around the globe and the death toll is at 238,431.
Some positive news snippets:
- The experimental Remdesivir drug trial is offering some good news. Data from nearly 1000 critically ill patients around the world show that the drug helped them recover 31% faster. If this succeeds, then the recovery time can be cut down to 11 days from the existing 15 days.
- In Italy, the government will permit activity outside homes from May 4, 2020. Manufacturers are expected to resume operations from the same date too.
- In Germany, small shops reopened this week and the government plans to reopen playgrounds, churches, and museums from May 4, 2020.
- In France, most businesses are expected to reopen from May 11, 2020. Local transport will also be largely restored.
- Spain also plans to reopen its economy in four stages starting May 11, 2020.
- Greece plans to ease the restrictions from May 4, 2020, and allow small shops to open.
- More than one million patients have recovered and been discharged around the globe.
1. United States
The US markets had a mixed week as the partial lifting of lockdown orders in some states as well as overseas countries boosted market sentiment. Overall, the markets ended the month staging a marked recovery from the bottom in March. In fact, the S&P 500 Index registered its best monthly gain since 1987 – up by 12.9%. Also, The DOW added 11% and the Nasdaq Composite gained 15% too.
With news about some states in the US and countries around the world taking steps to reopen their economies, the investor sentiment received a much-needed ‘shot-in-the-arm’. Also, the Federal Reserve expanded the scope of its $500 billion stimulus package to states and municipalities further lifting the market sentiment.
Positive data of the Remdesivir drug trial managed to keep the hopes of a cure alive and investors optimistic. According to the preliminary results, at least 50% of the patients treated with a five-day dosage of the drug showed signs of improvement. Jerome Powell, the Chairman of the Federal Reserve, made a statement that the Fed will do whatever it takes to strengthen the US economy. This bolstered investor confidence too.
- Many tech mega-corporations declared the earnings of the last quarter showing a huge drop in revenues
- The US trade deficit for March stood at $64.2 billion (from $59.9 billion in February)
- The Department of Labor reported the number of jobless claims this week at 3.839 million taking the six-week tally to 30.3 million
- News reports regarding the US planning regulatory actions against China caused concern among the investors as the possibility of another trade war seemed inevitable
The European markets also had a mixed week as the positive sentiment due to the news about the possible lifting of the lockdown was dampened by the European Central Bank’s decision to stop injecting any more stimulus into the economy.
The week started well for European stocks with major indices closing higher on the first three trading days. Investors were optimistic and hopeful about positive news surrounding the lockdown exit strategies.
As news about the positive data from the Remdesivir drug trial was released, European investors had more reason to cheer. While many European companies declared their Q1 earnings this week, the overall market optimism helped keep the indices in the green for the first half of the week.
Boris Johnson, the Prime Minister of the UK announced that in the coming week, he will lay out a plan of getting the country back to normalcy.
- Oil prices started declining again this week indicating the storage around the world was rapidly filling up
- The earnings reports of tech companies in the US also dampened the mood in the European markets
- While the European Central Bank said that it is ready to increase the economic stimulus, it held the current rates sending mixed signals to investors
- The GDP of the Euro Zone contracted by 3.8% in the last quarter as compared to the quarter preceding it
In a week shortened by the Labor Day on Friday, major indices in the Asia Pacific region closed higher.
- The central bank in Japan announced a series of measures to counter the economic impact of the pandemic
- Falling oil prices on fears that the global storage capacity might soon run out due to the weak demand for oil kept the markets in check in the region
- The news about positive data on the Remdesivir drug trials boosted market sentiment in the region too
Heading into next week…
With April behind us, we are expecting some action in the first week of May 2020. With the decision on interest rates expected in Australia and the UK, investors will be watching closely to assess its impact. We are also expecting some Purchase Managers’ Index (PMI) reports for the UK, Canada, and some European markets.
Additionally, a few monthly reports about unemployment claims, inflation rates, retail sales, etc. are expected this week too.
The materials and data contained herein are for information only and shall in no event be construed as an offer to purchase or sell or the solicitation of an offer to purchase or sell any securities in any jurisdiction. Kristal Advisors does not make any representation, undertaking, warranty or guarantee as to the update, completeness, correctness, reliability or accuracy of the materials and data herein. All opinions, forecasts or estimation expressed herein are subject to change without prior notice. Kristal Advisors and its affiliates accept no liability or responsibility whatsoever for any direct or consequential loss and/or damages arising out of or in relation to any use of opinions, forecasts, materials and data contained herein or otherwise arising in connection therewith.
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