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Analysis

Weekly market review May 18-22, 2020


May 18, 2020
Weekly market review May 18-22, 2020

Stock market

Stock market indices fell last week, despite the gradual lifting of lockdown restrictions in Europe and the United States. Stock market sell-off was triggered by fears of a second wave of a pandemic caused by data from China, South Korea, and Germany.

U.S. chief infectious disease specialist warned of the danger of a second wave of the epidemic as a result of the early removal of lockdown restrictions in some states.

Demand for risky assets was also negatively affected by growing tensions between the United States and China. The White House blocked shipments of semiconductors to the Chinese company Huawei from global chipmakers and urged state pension funds not to invest in Chinese companies listed on United States stock exchanges.

Donald Trump even threatened to cut off relations with China, the government of which, according to the United States, concealed information about the outbreak of coronavirus epidemic.

Commodities

market sentiment

The price of oil recovered a significant part of its positions and reached the 2-year maximum. The price of black gold has been rising due to the following factors:

  1. The gradual removal of lockdown restrictions and restoration of economic activity.
  2. Statement by sources from OPEC + on the readiness to extend current oil production cuts until the end of the year.
  3. United States oil inventories decreased last week according to the data from the Department of Energy.

The price of gold reached a new 7-year maximum. Gold was boosted by the shortage of physical gold supply, as well as by the unprecedented monetary stimulus introduced by leading central banks.

Main events of the current week

  • On Tuesday, data on employment and average earnings change in the UK, German economic sentiment index, and US building permits will be presented.  Reserve Bank of Australia meeting minutes will be published as well. Fed Chairman Jerome Powell will testify in Congress.
  • On Wednesday, data on consumer price index in the UK, the eurozone, and Canada will be presented, as well as data on crude oil inventories. The People’s Bank of China will make a decision on the loan prime rate. FOMC meeting minutes will be published.
  • On Thursday, data on UK manufacturing and services PMI will be presented as well as the United States’ jobless claims and existing home sales. Fed Chairman Jerome Powell will deliver a speech.
  • On Friday, data on retail sales in the UK and Canada, as well as German PMI will be published.

Corporate earnings reports

  • Walmart will present a quarterly report on May 19 before the market open. Shares of the retail giant rose despite a market sell-off in February-March, reaching a new all-time maximum in April. The booming demand associated with preparations for lockdown restrictions contributed to the company’s revenue growth in the first quarter. Walmart is also actively developing online sales and improving delivery programs.
  • Nvidia will report on May 21 after market close. Nvidia shares recently reached a new historical maximum. The growing demand for graphic processing units during pandemic creates favourable conditions for the development of the company’s business, the products of which are used in such promising areas as artificial intelligence, machine learning, autonomous driving, and the Internet of things.
  • Hewlett Packard Enterprise will release a quarterly report on May 21 after the market close. The company has a significant share of recurring revenue in the company’s revenue structure, as well as a portfolio of customers consisting of large corporations, which will help the company survive the economic difficulties associated with the pandemic.
  • Alibaba will report earnings on May 22 before the market open. Lockdown restrictions introduced due to the coronavirus pandemic created favourable conditions for the development of the company’s core businesses, primarily online sales and cloud services.

Disclaimer: This article is not investment advice or an investment recommendation and should not be considered as such. The information above is not an invitation to trade and it does not guarantee or predict future performance. The investor is solely responsible for the risk of their decisions. The analysis and commentary presented do not include any consideration of your personal investment objectives, financial circumstances or needs.

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Categories: Analysis

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