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Weekly Market Report

04 May 2020

04 May 2020


The Market Last Week

Global equities ended mostly higher last week, as several countries around the world began to reopen their economies amid the Covid-19 pandemic recovery.

UK Markets ended the week in positive territory, as many countries began easing coronavirus induced restrictions.

In the UK, the CBI distributive trades survey retail sales balance eased in April, registering its biggest fall since December 2008.

Retail sales dropped more-than-expected in March.

Mortgage approvals for house purchases fell to a 7-year low in March.

The final Markit manufacturing PMI contracted at its fastest pace in April.

Net consumer credit declined in March.

The Nationwide house price index unexpectedly advanced at its fastest pace since 2017 in April.

The BRC shop price index slumped in March, marking its highest rate of decline since January 2017.

European Markets ended the week on a positive footing, amid signs of slowdown in the coronavirus cases in the Euro-zone.

In the Eurozone, the business climate indicator fell in April.

Eurozone’s services sentiment indicator declined in April, registering its steepest decline ever.

In the Eurozone, the economic sentiment indicator slumped in April, recording its largest fall since the survey started in 1985.

Eurozone’s industrial confidence index fell more-than-expected in April.

The consumer confidence index in the Eurozone weakened in April.

In the Eurozone, the unemployment rate advanced less than market consensus in March.

The preliminary consumer price index (CPI) in the Eurozone advanced more than market anticipations in April.

Eurozone’s economic growth contracted in 1Q20, recording its lowest reading since records began in 1995.

The European Central Bank (ECB), in its latest monetary policy meeting, kept its benchmark interest rate unchanged at 0%, as widely expected. However, the ECB stated that it was ready to increase its coronavirus stimulus program, if needed. Moreover, the central bank also announced that it had eased lending conditions for banks. Meanwhile, ECB President, Christine Lagarde stated that the central bank expects a GDP contraction between 5% and 12% for 2020.

Germany’s consumer price inflation slowed to its lowest level since late 2016 in April.

In Germany, the Ifo business climate index dropped to a historic low level in April.

The Ifo current assessment index in Germany fell more than market forecast in April.

Germany’s Ifo business expectations index slid more-than-anticipated in April.

In Germany, seasonally adjusted unemployment rate sharply advanced in April.

Retail sales in Germany dropped less-than-expected in March.

US Markets ended the week in red, after US President, Donald Trump, threatened to impose new tariffs against China.

In the US, pending home sales fell more than market consensus on a monthly basis in March.

The flash annualised gross domestic product (GDP) declined in 1Q20, recording its biggest drop since 2008.

The MBA mortgage applications declined on a weekly basis in the week ended 24 April 2020.

The Richmond Fed manufacturing index eased more-than-expected in April.

Advance goods trade deficit widened more than market forecast in March.

The CB consumer confidence index recorded its largest drop since 1973 in April.

The Dallas Fed manufacturing business index dropped in April.

Durable goods orders fell more than market anticipations in March.

The final Michigan consumer sentiment index dropped in April.

The final Markit manufacturing eased in April, marking its lowest level in 11 years.

Personal income dropped more than market expectations on a monthly basis in March.

Personal spending declined more than market forecast on a monthly basis in March.

The Chicago Fed Purchasing Managers’ Index fell more than market expectations in April.

Seasonally adjusted initial jobless claims dropped less than market consensus on a weekly basis in the week ended 24 April 2020.

The ISM manufacturing activity index fell less-than-anticipated in April.

Construction spending unexpectedly rose on a monthly basis in March.

Asian Markets ended firmer last week, amid signs of progress in treating coronavirus treatment.

In Japan, the unemployment rate climbed at par with market anticipations in March.

Japan’s retail trade fell less-than-expected on an annual basis in March.

In Japan, industrial production dropped on a monthly basis in March.

Japan’s Jibun Bank manufacturing PMI declined more than market anticipations in April.

In Japan, the consumer confidence index sharply deteriorated in April.

Japan’s housing starts eased less-than-expected on a yearly basis in March.

The Bank of Japan (BoJ), in its latest monetary policy meeting, kept its key interest rate unchanged -0.1%, as widely expected. Further, the BoJ expanded its monetary stimulus and pledged to buy unlimited amount of bonds to keep borrowing costs low. Additionally, the central bank cut its economic forecast and projected inflation to fall well short of its 2% target for three more years.

Australia’s private sector credit demand advanced on an annual basis in March.

In Australia, consumer price inflation accelerated to its highest level in over five years in 1Q20.

Australia’s AiG performance of manufacturing index plummeted in April.

The Commonwealth Bank manufacturing PMI in Australia dropped in April.

Australia’s building permits fell less than market forecast in March.

The producer price index (PPI) in Australia advanced on a quarterly basis in 1Q20.

China’s non-manufacturing PMI climbed in April.

In China, the NBS manufacturing PMI slid in April.

In China, the Caixin manufacturing PMI dropped in April.


Currency Update

The EUR ended firmer against the USD last week, after the ECB kept its key interest rate unchanged.
The British Pound ended higher against the greenback last week, amid optimism over plans to ease coronavirus induced regulations.
The US Dollar ended weaker against its major counterparts last week, as the US economy reported its largest contraction in the first quarter of 2020.


Fed pledges to keep rates near zero until the economy achieves full employment, inflation target

The US Federal Reserve (Fed), in its latest monetary policy decision, kept its key interest rate unchanged at 0.25% and pledged to maintain it there until the economy recovers. Additionally, the central bank pledged to maintain accommodative policy until the economy again reaches full employment and 2% inflation target. In a post-meeting statement, the Fed stated that the ongoing coronavirus pandemic will “weigh heavily” on economic activity and pose “considerable risks” to the economic outlook over the medium term.


The Week Ahead

Going ahead this week, investors will keep a tab on the US factory orders, trade balance, the Markit services PMI, ISM non-manufacturing PMI, ADP employment change, initial jobless claims, non-farm payrolls, unemployment rate and average hourly earnings for further direction. Additionally, in the Eurozone, the PPI, the Markit services PMI along with Germany’s factory orders, industrial production and trade balance will keep investors on their toes. Also, UK’s Markit services PMI, the Bank of England’s interest rate decision and the GfK consumer confidence index would garner significant amount of investor attention.


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