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Weekly Market Report

09 Mar 2020

09 March 2020


The Market Last Week

Global equities ended mixed last week, as monetary easing measures by global central banks overshadowed concerns over the coronavirus outbreak.

UK Markets ended the week in negative territory, after Goldman Sachs warned that the coronavirus outbreak might push Britain to the brink of recession.

UK’s Markit manufacturing sector expanded at its fastest pace in ten months in February.

The Markit services PMI dropped in February.

The Markit construction PMI advanced more than market forecast in February.

Mortgage approvals advanced to its highest level since February 2016 in January.

Consumer credit recorded a rise in January.

The Halifax house prices grew for the fourth consecutive month in February.

European Markets ended the week on a negative footing, amid fall in crude oil prices and lockdown in northern Italy due to the coronavirus outbreak.

Eurozone’s consumer price inflation slowed to a 3-month low level in February.

The producer price index (PPI) in the Eurozone dropped in line with market expectations on an annual basis in January.

Eurozone’s Markit manufacturing PMI advanced in February.

Unemployment rate in the Eurozone remained unchanged at its lowest since May 2008 in January.

Eurozone’s Markit services PMI rose in February.

Germany’s Markit manufacturing PMI climbed in February, hitting its highest level in 13 months.

Retail sales in Germany advanced less-than-expected on a monthly basis in January.

Germany’s factory orders climbed to a 5-year high level on a monthly basis in January.

The Markit services PMI in Germany eased in February.

US Markets ended the week in green, after the US Federal Reserve (Fed) cut its key interest rate to reduce the impact of coronavirus on global economy.

The US nonfarm payrolls increased more than market anticipations in February.

Trade deficit narrowed more-than-expected in January.

Average hourly earnings increased on a monthly basis in February.

Unemployment rate dropped in February.

Construction spending rose on a monthly basis in February.

The IBD/TIPP economic optimism index dropped more-than-expected in March.

The MBA mortgage applications surged on a weekly basis in the week ended 28 February 2020.

Private sector employment unexpectedly climbed in February.

The ISM non-manufacturing PMI climbed to a one-year high level in February.

The Markit manufacturing PMI declined in February.

The ISM manufacturing PMI dropped to its lowest level since late 2019 in February.

The final Markit services PMI declined in February.

Initial jobless claims declined less-than-expected on a weekly basis in the week ended 28 February 2020.

Factory orders dropped more-than-expected on a monthly basis in January.

Final durable goods orders decreased on a monthly basis in January.

Consumer credit fell more than market consensus in January.

The US Fed, in a surprise move, slashed its benchmark interest rate by 50bps to 1.25%, its biggest single cut in more than a decade, in response to the growing concerns over the coronavirus outbreak. However, the Fed Chairman, Jerome Powell, reiterated that the US economy remained “strong” but cautioned that the coronavirus posed “evolving risks” to economic activity. Further, he stated that the central bank is closely monitoring developments and would “act as appropriate” to support the economy.

The US Fed, in its latest Beige Book report, indicated that the US economic activity expanded at a “modest to moderate” pace in majority of the Fed districts. The report revealed that coronavirus was negatively impacting travel and tourism in the US, with growth in tourism described as flat to modest. On the outlook front, the Beige Book reported that spread of coronavirus and the upcoming presidential elections pose risks to the country’s economic outlook.

Asian Markets ended mostly firmer last week, mirroring gains in their US counterparts.

Australia’s building permits unexpectedly plunged on a monthly basis in January.

Retail sales in Australia dropped on a monthly basis in January.

Australia’s AiG performance of services index declined in February.

Current account surplus in Australia narrowed more than market anticipations in 4Q19.

Australia’s AiG performance of construction index rose in February.

The Commonwealth Bank services PMI in Australia advanced in February.

Australia’s gross domestic product (GDP) advanced more than market consensus on a quarterly basis in 4Q19.

New home sales in Australia advanced on a monthly basis in January.

Australia’s seasonally adjusted trade surplus narrowed less-than-expected in January.

China recorded a trade deficit in February.

The Caixin services PMI in China unexpectedly dropped in February.

Japan’s consumer confidence index unexpectedly declined in February.

In Japan, GDP fell more than market forecast on a quarterly basis in 4Q19.

Japan’s Jibun Bank services PMI dropped less-than-expected in February.

The Reserve Bank of Australia (RBA), in its latst monetary policy meeting, cut its key interest rate to a new record low of 0.5%, amid escalating coronavirus concerns. Meanwhile, the RBA Governor, Philip Lowe, reiterated that the central bank is prepared to ease monetary policy further to support the Australian economy.


Currency Update

The EUR ended firmer against the USD last week, after Germany’s factory orders climbed to its highest level since July 2014 in January.
The British Pound ended stronger against the greenback in the prior week, after European Union’s Brexit chief negotiator, Michel Barnier, stated that a trade deal with the UK could be finalised in 2020.
The US Dollar ended weaker against its major counterparts last week, as a sharp drop in US government bond yields affected the greenback’s safe haven appeal.


OECD slashes global growth outlook

The Organisation for Economic Cooperation and Development (OECD) downgraded its global growth forecast to 2.4% from 2.9%. The forecast for 2021 was trimmed to 3.3% from 3.6%. Moreover, the organisation slashed China's growth forecast to 4.9% from 5.7%. Meanwhile, the US GDP is forecast to grow 1.9% in 2020 and 2.1% in 2021. For the Euro area, the OECD expects growth of 0.8% this year, down from 1.1%. The UK is forecast to grow 0.8% each in 2020 and 2021. Further, growth forecast for Australia was lowered to 1.8% this year. Additionally, the organisation warned that an escalation in the coronavirus outbreak could cut global economic growth in half and would push several countries into recession this year.


The Week Ahead

Going ahead this week, investors will keep a tab on the European Central Bank’s interest rate decision, Eurozone’s GDP and the Sentix investor confidence index along with Germany’s consumer price index (CPI), industrial production, trade and current account balance for further direction. Additionally, the US CPI, the PPI, the NFIB business optimism index, the Michigan consumer sentiment index, monthly budget statement and initial jobless claims along with the UK’s GDP, trade balance, industrial and manufacturing production will be on investors’ radar.


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