Weekly Market Wrap 13-17/Apr/2020

Is the worst of this coronavirus finally behind us?

 Marius Paun | London, UK | Senior dealer | Friday 17th, April 2020

The earning session kicked off in the US and a string of big banks showed disappointing data. It was a different story for tech and e-commerce stocks performance with Amazon and Microsoft in positive territory for the year, Amazon actually reached a fresh record high. One point of note and to watch is the apparent weakness in the US dollar during the last few weeks, possibly on the fact that the US Fed was a lot more aggressive with its printing press than the rest of the world.

Despite that, the initial jobless claims surpassed 5 million again, bringing the total to over 22 million workers laid off in the past 4 weeks. This could be a possible reason why President Donald Trump is said to be attempting to agree an extra $2 trillion infrastructure package.

We also had two pieces of rather good news. Firstly, echoing pandemic data around the world, the US expressed optimism that coronavirus new cases growth has peaked. The UK and other European countries were also cautiously optimistic the worst could be behind us. The second one comes from big pharma company Gilead which announced that early data on coronavirus medicine remdesivir is very encouraging (reflected in their share price over the past 2 days).

Meanwhile, in China, a Customs bureau official said his country is seeing some signs of recovery in foreign trade. The news came after it’s been reported that China exports to the US were down more than 23% for the first quarter.

China’s trade balance for the first quarter showed a drop of 3.5% year on year for the exports (vs expectations of -12.8%) with imports rising 2.4% year on year (predicted -7%). And still, it brought over 100 billion yuan surplus. At the same time, China’s GDP fell 6.8% in the first quarter, the weakest numbers on record, it was reported on Friday.

Great news over the weekend in the UK with Prime Minister Boris Johnson being discharged from hospital after spending three days in intensive care with COVID-19.

News from Europe was somewhat encouraging with Reuters citing a draft by the German government outlining proposals to ease some of the restrictions. However social distancing measures will be kept in place until the beginning of May. Scientists from mainland Europe including hard-hit Italy and Spain (now joined by their colleagues in the US and the UK) have shown extensively this week the pandemic curve has finally begun to flatten. Fingers crossed!

In the meantime, the European Central Bank President Christine Lagarde has reiterated the central bank ‘remains committed to doing everything necessary within its mandate’ to support the economy.

Gold prices made headlines this week after it reached a 7-year high of $1746.7 during intraday trading on Tuesday, last seen on October 5th, 2012. The precious metal has been historically the preferred safe asset in times of turmoil. The rally was accentuated by a renewed weakness in the US dollar.

Members of OPEC+ cartel as well as G20 agreed over the weekend to cut around 9.7 million barrels a day of crude oil supply although it is not very clear how the cuts will be apportioned. In reaction, US crude May futures went higher initially to over $28.00 a barrel but since then it steadily dropped trading below $17.5 on Friday afternoon. The slump happened despite reassurances form Saudi Oil Minister Prince Abdulaziz saying they stand ready ‘to cut output again in June if needed’.