Weekly Feed5 Mins Read
Kristal Weekly Feed I 6th April 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 one million and markets remained volatile.
- In the US, the pandemic stopped the 113-week job growth streak and President Trump warned the citizens of harder economic times ahead. The first quarter of 2020 was the worst for the S&P 500 Index since 1938.
- European markets remained cautious as they experienced the worst quarter in 18 years. Markets were mixed.
- While the Australian markets offered some reason to cheer, most markets in the Asia-Pacific region remained volatile throughout the week.
Covid-19 now has 1,082,054 confirmed cases around the globe and the death toll is at 58,142.
How did the week start?:
- United States: In the US, this week started on a positive note as investors hoped the efforts of healthcare companies and governments would slow the spread of the virus. On March 29th, President Trump announced an extension of the lockdown that also had a positive impact on the market sentiment.
- Europe: European markets also started the week in the green with some last-minute gains. Buyers focused on defensive sectors despite the anxiety over the economic impact of the virus.
- Asia-Pacific: Most Southeast Asian markets closed lower on Monday as new cases of the virus dwarfed the policy easing efforts by most central banks. Australian markets, however, registered their biggest one-day jump in history as they closed 7% higher as the investor confidence received a boost due to the stimulus package announced by the government.
The three major stock indices in the United States closed higher on Monday as investors latched on to the hope that the efforts made by healthcare companies and governments across the globe would slow down the spread of the virus. Markets were also boosted by healthcare companies. Tuesday marked the end of the first quarter and the investor sentiment was dampened due to the impact of the pandemic. In fact, the first quarter of 2020 was the worst for the S&P 500 Index since 1938! Also, most economists have reduced the growth expectations for 2020 leading to a fear of a long-lasting recession. On Wednesday, President Trump’s warning to the country about more difficult times ahead caused the market to close lower. According to the latest projections, if the US continued the current social distancing measures, the casualties could be as high as 100,000-240,000. The worst-case scenario was projected at 1.5-2.2 million deaths due to the virus. Thursday was a relatively better day for stocks in the US. On President Trump’s request, Saudi Arabia and Russia are expected to cut output by around 10-15 million barrels per day. This outweighed the shock of over 6 million jobless claims due to the lockdowns. The week ended in the red as the pandemic managed to end the 113-week job growth streak. Investors were also skeptical heading into the weekend as fears of the number of cases rising gripped them.
While the European investors remained cautious as they watched the virus spread across the continent, most major indices started the week in the green with the pan-European Stoxx 600 gaining over 1%. These gains extended into Tuesday after sporadic moves helped the markets remain in the green. The last quarter was the worst for the European markets in almost 18 years. A drop in the number of new cases in Italy also boosted market sentiment. The two-day rally ended on Wednesday as disappointing economic data from Asia fanned fears of a global economic recession in investors. The market sentiment remained fragile as most indices managed to nudge a little higher on Thursday thanks to a late rally in the energy sector. The sharp rise in the US jobless claims keep investors on the edge. As the economic impact of the Covid-19 pandemic became clearer, European markets ended the week in the red.
Despite the efforts made by most central banks, most Southeast Asian markets closed in the red as new confirmed cases of the coronavirus dampened the mood. Australian investors were optimistic and helped the markets register their biggest single-day increase of 7% as the government announced an economic stimulus package to help battle the effects of the pandemic. Most Asia-Pacific markets closed higher on Tuesday as reports about China’s factory activity showed growth in March as compared to February. However, the cheer ended on Wednesday as fears of a global recession gripped the investors causing most indices to close in the red. On Thursday, while investors tried ignoring the economic impact of the pandemic, President Trump’s warning to the US citizens about difficult times ahead kept the markets in check. By the end of the week, as the number of confirmed Covid-19 cases crossed the one million mark, most Asia-Pacific markets closed lower.
Heading into next week…
As countries are locking down in an attempt to control the spread of the virus, businesses and economies are facing the brunt. Most countries have announced stimulus packages to people to minimize the impact of the pandemic. However, exponentially increasing numbers are doing little to allow the markets to settle. As each country battles this crisis in its own way, investors are trying to hold on to the tiniest ray of hope. With most markets in the bear phase, we have been recommending all our investors to take a step back and analyze the health of their current portfolios. They need to re-strategize to align their investments with the new markets.
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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