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Weekly Market Report April 27- May 1


April 27, 2020
Weekly Market Report April 27- May 1

A record number of new cases of COVID-19, exceeding 101 thousand, was registered on Friday. Russia and Iran surpassed China in terms of confirmed cases. Meanwhile, the last patient recovered in Hubei province. The total number of confirmed cases globally exceeded 2 million 994 thousand, and the number of deaths exceeded 207 thousand.

In the USA, the number of states in which lockdown measures will be partially lifted is growing. Authorities in the states of Colorado, Mississippi, Tennessee, Minnesota, and Montana can ease restrictions this week.

Boris Johnson, who has returned to his duties, is expected to announce plans for easing lockdowns this week.

The Indices In The Stock market

Stock market indices rose due to the adoption by the US Congress of a law on the allocation of additional funds for small business lending programs, as well as for healthcare. The total amount of state aid provided by this law is $484 billion. The adoption of this law became possible after a compromise was reached between Republicans and Democrats.

Representatives of the Democratic Party also insisted on the allocation of additional funds as assistance to local budgets. Trump said he did not mind supporting the states, but this decision should be enshrined in a separate law.

European stock market indices have been consolidating pending additional government support measures. A summit of the European Council took place last week, at which the possibility of creating a stabilization fund was discussed. Financial assistance from this fund is supposed to be provided to the EU member states.

However, there is no consensus among EU members on the size of this fund and the sources of its financing. The European Council instructed the European Commission to develop proposals on the formation of this fund.

Commodities Current Status

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The situation in the oil market developed dramatically last week. On Monday, which has already been dubbed “Black Monday” for the oil market, the price of oil futures reached a negative value for the first time in history. It happened with the May futures, which expired on Tuesday, and reached -$38 per barrel on the day before expiration.

The futures price fell to negative value due to ​​the reluctance of the holders of these contracts to accept the physical supply of oil as storage facilities are almost full. After May futures expired, the price of oil restored some of the lost positions.

However, the oil prices will remain under pressure as long as there is a significant imbalance in supply and demand. Trend reversal is possible only in case of restoration of economic activity and transportation, as well as a reduction of oil supply.

Last week, US oil company Continental Resources announced the cessation of oil production and sales due to low prices. OPEC + countries held an emergency meeting on the current situation, however, they did not make any decision.

The price of gold approached a 7-year maximum. The shortage of physical gold contributes to the growth of the precious metal price.

Here Are The Main Events For Current Week

  • On Tuesday, data on the employment change in New Zealand will be presented
  • On Wednesday, the consumer price index in Australia, US GDP, and crude oil inventories will be published. Fed will announce the results of its meeting. Market participants will be interested in the details of previously launched lending and repurchase programs.
  • On Thursday, data on employment in Germany, China Manufacturing PMI, consumer price index in the eurozone, and GDP of Canada will be presented. ECB will hold a meeting, at which additional monetary stimulus may be announced. In particular, the ECB can expand the program of quantitative easing by 500 billion euros.
  • On Friday, the US and UK manufacturing purchasing managers’ index will be published.

Corporate Earnings Reports April

A lot of companies will report first-quarter earnings this week, including the largest US companies.

  • Google will report on April 28 after the market close. The quarter turned out to be difficult for the search giant, which still generates 83% of revenue from advertising. Most companies are cutting advertising budgets due to economic uncertainty.
  • Tesla will report on April 29 after the market close. Tesla shares rose significantly in April against the backdrop of data on electric vehicle deliveries in the first quarter. Over 88 thousand cars were delivered, exceeding expectations of 80 thousand deliveries). However, the closure of factories in the United States is a serious blow for the company, which so far has not been able to achieve sustainable profitability.
  • Facebook, which will report on April 29 after market close, also faced a substantial decrease in its revenue due to lower advertising spending and lower advertising costs.
  • The introduction of lockdown measures can have a positive impact on Microsoft due to a significant increase in demand for cloud services, as well as video conferencing applications. The company will present a quarterly report on April 29 after the market close.
  • The lockdown restrictions had a positive effect on almost every segment of Amazon’s business. The rapid growth in the number of online orders has led to the need to hire an additional number of employees. In March, the e-commerce giant hired 100,000 new employees and announced plans to hire another 75,000 in April. Increased demand for cloud and streaming services also contributes to Amazon’s revenue growth. The company will report earnings on April 30 after the market close.

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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