Friday, 3 April 2020

Markets rise even as economists fear severe economic contraction

Markets were mostly higher on Thursday.

The S&P 500 surged 2.3 percent, the STOXX Europe 600 rose 0.4 percent and the Shanghai Composite jumped 1.7 percent. However, the Nikkei 225 fell 1.4 percent.

Oil prices surged as US President Donald Trump tweeted that he expects Saudi Arabia and Russia to reach an agreement to significantly cut production. West Texas Intermediate crude rose 24.7 percent and Brent rose 21 percent.

However, Manish Raj, chief financial officer at Velandera Energy, noted that “skepticism remains in the market whether the said cuts would actually be made”.

“All the fine details seem to still be up in the air so President Trump’s tweet might have been premature,” said Edward Moya, senior market analyst at Oanda.

Meanwhile, the COVID-19 pandemic remains a threat to markets, with confirmed cases topping one million on Thursday.

Financial ratings agency Fitch on Thursday predicted that the US and eurozone economies would contract this quarter by up to 30 per cent on an annualised basis.

The US Labour Department reported that 6.65 million workers filed for unemployment benefits last week, the most ever recorded.

Thursday, 2 April 2020

Markets fall, March low “will get taken out”

Markets fell sharply on Wednesday.

The S&P 500 sank 4.4 percent, the STOXX Europe 600 tumbled 2.9 percent and the Nikkei 225 plunged 4.5 percent.

DoubleLine Capital CEO Jeffrey Gundlach said on Tuesday that the market was set to fall and that the March low “will get taken out”.

“Take out the low of March and then we’ll get a more enduring low,” he said.

US President Donald Trump warned late Tuesday that a “very, very painful” two weeks lies ahead for the country as the White House released new projections for 100,000 to 240,000 deaths in the US from the COVID-19 pandemic even if current social distancing guidelines are maintained.

Elsewhere, Italy reported another 727 deaths from COVID-19 on Wednesday, bringing its total death toll to 13,155, while Spain reported 864 deaths, bringing its total to 9,053.

France reported 509 new deaths on Wednesday to become the fourth country to pass the 4,000 coronavirus deaths threshold after Italy, Spain and the US.

Wednesday, 1 April 2020

Markets mixed as global COVID-19 deaths continue to rise

Markets were mixed on Tuesday.

The S&P 500 fell 1.6 percent but the STOXX Europe 600 rose 1.7 percent.

Earlier in Asia, the Nikkei 225 fell 0.9 percent but the Shanghai Composite rose 0.1 percent.

Some relief for investors came from data from China showing that its official manufacturing PMI rose to 52.0 in March from 35.7 in February and its services PMI rose to 52.3 from 29.6.

However, economists at ANZ said that the “outlook for Q2 continues to be concerning due to an acute drop in external demand and lacklustre domestic demand”.

Simona Gambarini, markets economist at Capital Economics, said that a sustained recovery in stock prices “probably won’t happen until there is evidence that the pandemic is being contained at a global level”.

That appears to be unlikely soon. The global COVID-19 pandemic has continued to exact a heavy toll around the world, with both Italy and Spain reporting more than 800 deaths from the disease on Tuesday and French and US death tolls surpassing China's death toll.

Tuesday, 31 March 2020

US stocks rise even as COVID-19 death toll surpasses 3,000

Markets were mixed on Monday, with stocks rising in the US and Europe but falling in Asia.

The S&P 500 surged 3.4 percent after President Donald Trump said on Sunday that he had extended social-distancing guidelines through 30 April and that the US would be “well on our way to recovery” by early June.

However, analysts at Goldman Sachs suggested that for the stock market to hit a bottom, among other things, the spread of COVID-19 must begin to slow.

Instead, the toll from COVID-19 in the US has continued to rise dramatically, hitting 3,008 deaths and more than 160,000 confirmed infections on Monday evening.

“Tactically, however, we believe it is likely that the market will turn lower in the coming weeks, and caution investors against chasing this rally,” the Goldman analysts said.

Meanwhile, in Italy, the COVID-19 death toll rose by 812 on Monday to 11,591, the most in the world, but the number of new cases rose by 4,050, the lowest since 17 March.

Monday, 30 March 2020

S&P 500 jumps with COVID-19 cases

Investors received some respite last week from the gloom that had pervaded markets recently.

The S&P 500 rose 10.3 percent last week even as the US became the country with the highest number of confirmed COVID-19 cases in the world.

As of Sunday evening, there were more than 137,000 cases and at least 2,400 deaths from the disease.

Dr Anthony Fauci of the National Institute of Allergy and Infectious Diseases said on CNN on Sunday that, based on modelling, 100,000 or more could die from the disease in the US.

Meanwhile, despite having a smaller population than the US, the number of cases in Italy hit 97,689 on Sunday. It also has 10,779 deaths from the disease, the highest in the world.

The good news, though, is that the daily rise in infections has slowed to 5.6 per cent, the lowest rate since Italian officials started tracking cases following the first death on 21 February.

There is no sense of complacency though in the Italian government. "The measures expiring on Apr 3 will inevitably be extended," said regional affairs minister Francesco Boccia, referring to the lockdown.

Saturday, 28 March 2020

Markets fall, US COVID-19 cases pass 100,000

Markets were mostly lower on Friday.

The S&P 500 tumbled 3.4 percent and the STOXX Europe 600 fell 3.3 percent. However, the Nikkei 225 jumped 3.9 percent.

“Economic data is deteriorating quickly, and we still have few signs on just how severe the economic impact will be,” said Lindsey Bell, chief investment strategist at Ally Invest.

“The bottom line is that the recovery from this crisis will be a lot slower than consensus expects,” said Andrea Cicione, head of strategy at TS Lombard.

Oil prices plunged. West Texas Intermediate crude fell 4.8 percent and Brent fell 5.4 percent.

“According to industry reports, oil storage levels globally have already reached 75% of capacity, and continued stockpiling under closed demand would crash the prices to $10 in the coming months unless industrial activity restarts,” said Mihir Kapadia, chief executive offer of Sun Global Investments.

Global economic activity could take some time to pick up again, though, with COVID-19 cases still rising in many countries. In the US, the number of confirmed cases passed 100,000 on Friday while Italy recorded 919 deaths from the virus, the highest daily toll in the world, as its total of confirmed cases rose by 5,959 to 86,498, surpassing China's.