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Stock market | Currency market | Weekly market review May 4-8, 2020


May 4, 2020
Stock market | Currency market | Weekly market review May 4-8, 2020

Stock market

The stock market managed to recover most of the losses incurred in March, due to substantial fiscal support measures and expectations of gradual lifting of lockdowns. However, interest in risky assets declined at the end of last week amid Trump’s statement about the possible introduction of tariffs on imports from China due to the fact that China, according to the US, concealed the emergence and spread of coronavirus.

The threat of a new round of trade confrontation between the two largest world economies has put downward pressure on stock market indices. The stock market can be boosted in the medium term by the expectations of the adoption of additional fiscal support measures in the United States.  Donald Trump said that additional support measures could amount to 3 trillion dollars, which would include government orders for infrastructure projects.

 Currency market

The euro reached a monthly maximum following a meeting of the ECB, at which, contrary to the expectations, the regulator decided not to expand the quantitative easing program, which boosted the single currency.

On Wednesday, the Fed held a meeting, at which the regulator announced its intention to continue its quantitative easing program. The dollar depreciated amid the Fed’s decision to expand the lending program for the real sector to include companies with revenues of up to $5 billion and a number of employees of up to 15 thousand.

Main events of the current week

  • On Tuesday, UK construction and services purchasing managers’ indices and US non-manufacturing PMI will be presented, as well as data on the employment change in New Zealand. A meeting of the Reserve Bank of Australia will also be held. It is expected that the regulator will not make changes to the monetary policy, leaving the interest rate at 0.25%.
  • On Wednesday, data on retail sales in Australia, US ADP employment change, and crude oil inventories will be published.
  • On Thursday, US jobless claims and the index of business activity in Canada will be released. A meeting of the Bank of England will also take place. The regulator is not expected to change the interest rate, but the prospects for expanding the quantitative easing program will be the key point of the meeting.
  • Statistics on the US labour market will be presented on Friday: non-farm payrolls, unemployment rate, and average hourly earnings. Employment data in Canada will also be issued.

Corporate earnings reports

A number of European and American companies present earnings this week.

  • Hugo Boss will present a quarterly report on May 5 before the market open. The management of the company informed on a significant impact of the pandemic on the company’s performance due to the closure of stores.
  • Walt Disney will report on May 5 after the market close. The quarantine restrictions adopted in most countries caused significant damage to the company, which was forced to close all amusement parks. The media business of the company also suffered due to the cancellation of public events and a reduction in advertising revenue. The film production business was also shut down.
  • BMW will publish a quarterly report on May 6 before the market open. Automakers are facing significant difficulties due to the closure of factories and falling demand for cars amid declining purchasing power.
  • Biotechnological company Moderna will present a quarterly report on May 7 before the market open. The company has been developing a vaccine for COVID-19.  Moderna was the first company to start human tests of the vaccine and recently applied for the transition to the second phase of trials. Moderna entered into a partnership agreement with the Swiss pharmaceutical company Lonza, which will produce a billion doses of the vaccine.
  • Uber will present an earnings report on May 7 after the market close. Positive factors for the company are increased demand for Uber Eats services, the launch of new delivery services, as well as the obtainment of government contracts.

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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