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Weekly Market Report

16 Mar 2020

16 March 2020


The Market Last Week

Global equities ended sharply lower last week, after the World Health Organisation declared the coronavirus outbreak a global pandemic.

UK Markets ended the week in negative territory, amid fears that the Bank of England’s (BoE) economic stimulus would not be enough to reduce the impact of the coronavirus outbreak.

UK’s economic growth stagnated on a monthly basis in January.

Total trade surplus narrowed in January.

Industrial production unexpectedly declined on a monthly basis in January.

The BRC retail sales across all sectors declined more-than-expected on an annual basis in February.

Manufacturing production climbed in line with market consensus on a monthly basis in January.

The NIESR GDP estimate rose in the three months to February.

The RICS house price balance climbed more than market forecast in February.

The Rightmove house price index advanced on a monthly basis in March.

The BoE, in its latest meeting minutes, revealed that it has considered the option to cut interest rates further and elevate asset purchases to help lessen the economic shock of the coronavirus outbreak. Moreover, officials stated that risk appetite in global financial markets has deteriorated substantially, reflecting an escalation of concerns over the impact of Covid-19.

European Markets ended significantly weaker last week, after the US President, Donald Trump, announced a ban on European travellers for 30-days.

Eurozone’s economic growth slowed as initially estimated in the fourth quarter of 2019.

Eurozone’s Sentix investor confidence index dropped to its lowest level since April 2013 in March.

In January, Eurozone’s industrial production expanded for the first time in five months.

Germany’s consumer price index (CPI) rose remained unchanged an annual basis in February.

Industrial production in Germany rebounded on a monthly basis in January.

Germany’s trade surplus narrowed less-than-expected in January.

Current account surplus in Germany narrowed in January.

The European Central Bank (ECB), in its latest monetary policy decision, kept its interest rate unchanged at 0%, as expected. However, the central bank announced measures to support bank lending and expanded its asset purchase program by EUR120bn. Meanwhile, members expect the interest rates to remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2% within its projection horizon.

US Markets ended the week in red, after the US President, Donald Trump, declared a national emergency over the coronavirus outbreak.

The US CPI advanced more than market expectations on an annual basis in February.

The MBA mortgage applications surged on a weekly basis in the week ended 6 March 2020.

Budget deficit widened less than market forecast in February.

The NFIB small business optimism index advanced in line with market forecast in February.

The Michigan consumer sentiment index fell less-than-anticipated in March.

The US Fed, in its second emergency move, slashed its benchmark interest rate to a range of 0-0.25% and pledged to keep the interest rate steady until it was confident that the economy has recovered from the impact of coronavirus pandemic. Moreover, the Fed stated that it would purchase $700 billion worth of treasury bonds and mortgage-backed securities.

Asian Markets ended weaker last week, amid rising fears about the impact of coronavirus on global economy.

Australia’s NAB business confidence index in Australia fell in February.

Westpac consumer confidence index in Australia declined to a five-year low level in March.

Australia’s home loan approvals advanced in January.

NAB business conditions index in Australia recorded a flat reading in February.

Australia’s consumer inflation expectations remained unchanged in March.

China’s CPI advanced at par with market expectations in February.

The house price index in China rose in February.

China’s producer price index (PPI) declined more than market forecast in February.

Industrial production in China unexpectedly declined in February.

China’s retail sales unexpectedly dropped in February.

Japan’s PPI fell more than market anticipations on a monthly basis in February.


Currency Update

The EUR ended lower against the USD last week, after the European Central Bank President, Christine Lagarde, warned that the Eurozone could face a financial crisis similar to the global crisis of 2008, unless leaders act urgently on the coronavirus.
The British Pound ended weaker against the greenback last week, amid increasing worries over the coronavirus outbreak.
The US Dollar ended stronger against its major counterparts last week, after the US Fed announced interest rate cut and stimulus plans to combat coronavirus impact.


BoE cut its key interest rate to help support economic conditions

The BoE, in an emergency interest rate decision, lowered its benchmark interest rate by 50bps to 0.25% and warned that the coronavirus would bring a “sharp and large shock” to Britain’s economy. Additionally, the central bank warned that economic activity “is likely to weaken materially” in the UK over the coming months. Meanwhile, the bank announced a new term-funding scheme to support small and medium-sized companies. Separately, the BoE Governor, Mark Carney, stated that the central bank is prepared to take additional measures to combat the economic impact of the coronavirus outbreak.


The Week Ahead

Going ahead this week, investors will keep a tab on the US retail sales, industrial production, building permits, housing starts, initial jobless claims and existing home sales along with the UK’s ILO unemployment rate, claimant count rate, average earnings and public sector net borrowing for further indication. Additionally, Eurozone’s CPI, construction output, trade balance, current account balance, the ZEW survey indices in the Eurozone and Germany along with Germany’s PPI and the GfK consumer confidence index will be on investors’ radar.


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