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Analysis

Stock markets | Weekly market review March 30 to April 6, 2020


March 30, 2020
Stock markets | Weekly market review March 30 to April 6, 2020

Last week world stock markets were marked by the adoption of significant measures of economic support by the leading countries of the world, as well as the expansion of monetary stimulus on the background of accelerating the spread of the coronavirus pandemic.

The number of confirmed cases in the world is approaching 700 thousand, and the number of deaths has exceeded 32 thousand. New York State has become the new epicentre of the epidemic, where over 53 thousand cases have been confirmed.

USA and Italy overtook China

In the number of recorded cases, taking first and second place, respectively. Meanwhile, the epidemiological situation in China is improving. Restrictive measures are going to be removed in the province of Hubei, where the coronavirus pandemic began.

Stock markets On Monday

The Federal Reserve announced an unlimited quantitative easing program, stating that purchases of Treasury bonds and mortgage-backed securities will be carried out in the amounts required to ensure the effective functioning of the financial system.

The Fed will also expand its quantitative easing program to include municipal and corporate bonds. An unprecedented asset-purchase program, which is estimated to be around 4 trillion dollars, boosted stock markets and put downward pressure on the dollar, which lost a significant part of the positions won a week earlier.

US Congress passed the bill on economic measures aimed at smoothing the effects of the epidemic. This bill provides state support in the amount of 2.2 trillion dollars, which exceeds the package of measures taken in the midst of the 2008-2009 recession.

In particular, it provides direct financial aid to US citizens whose income is less than $100 thousand per year, loans to the industries most hit by the epidemic and small businesses and healthcare financing. The adoption of this law also contributed to the growth of the stock market.

Fiscal measures aimed at smoothing the economic consequences of the epidemic are also being taken in other countries. In Germany, a package of measures worth 750 billion euros was adopted, while in Japan, the possibility of providing state support in the amount of 135 billion dollars is being discussed.

Unprecedented fiscal and monetary measures boosted risky assets. Stock market indices restored some of their lost positions. Commodity prices also rose, with the exception of oil, which again has been approaching $20.

These measures can lead to a significant increase in the inflation rate, so assets such as gold and bitcoin, which are considered to be assets for protection against inflation, also increased in price.

World markets | Main events of the week

  • On Tuesday, the UK and Canada GDP, China manufacturing PMI, unemployment change in Germany and consumer price index in the eurozone will be published.
  • On Wednesday, manufacturing PMI’s of Germany, UK and USA will be presented. Also, there will be data on ADP employment change and crude oil inventories.
  • On Thursday, UK construction PMI and jobless claims in the USA will be published.
  • On Friday, US labour market statistics will be presented (non-farm payrolls, unemployment rate and average hourly earnings). There will also be data on US and UK services PMI, as well as data on retail sales in Australia.

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Categories: Analysis

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