Company / Analytics

Analytics, 13 April 2020

Week 15 in Brief

The spread of COVID-19 continued to shake financial markets across the world. As of Monday 13th April, over 1.85 million cases had been diagnosed globally with 114,331 deaths. On a single country basis, the United States alone has over 30% of all global COVID-19 infections (over 557,000) cases, up from 25% last week. New York state alone has more COVID-19 patients than any country in the world, apart from the United States.

On the financial markets, the major US stock indices finished higher on Thursday, their best weeks since 1974 as investors appear optimistic that the coronavirus crisis is under control.

Stocks had already surged on Wednesday following Sen. Bernie Sanders’ decision to drop out of the presidential race, leaving former Vice President Joe Biden as the presumptive Democratic nominee. Over a third of investors view Biden as the most stock-market friendly Democratic candidate. Sanders had proposed introducing healthcare, wealth and Wall Street reform measures that are contrary to the free market.

The S&P 500 closed the week with a 12% gain, its best weekly performance since 1974 when it rallied 14% in a single week. The Dow Jones Industrial Average climbed more than 12% for one of its biggest weekly gains ever. The Nasdaq Composite was 62.67 (+0.77%) for the day (Thursday).

With nearly 17 million unemployment insurance claims and declining consumer sentiment, investors continued to buy stocks.

Investors are betting that powerful interventions from Washington, including an additional $2.3 trillion in lending programs from the Federal Reserve announced on Thursday will enable major companies to emerge with little damage to their long-term profitability. The central bank will also buy good investment-grade and junk bonds and Treasury Secretary Mnuchin believes the US could be open for business in May.

European markets ended the week sharply higher with shares in London leading the region. The FTSE 100 is up 2.90% while Germany’s DAX is up 2.24% and France’s CAC 40 is up 1.44%, CNN Business reported.

Asian markets finished mixed as of the most recent closing prices. The Hang Seng gained 1.38%, while the Nikkei 225 led the Shanghai Composite lower. They fell 2.33% and 0.49% respectively, CNN Business reported. In South American markets, The Bovespa lost 1.20%.

On the commodities side, oil was the dominant news. Saudi Arabia and Russia reached a truce to reduce production by 10 million barrels per day, which is good news for oil companies that have been hammered by plunging prices of crude. However, the agreed production cut is significantly lower than that needed to ‘balance’ the market. The market had hoped for a larger cut and reacted poorly to what is the largest production cut in OPEC’s history.

This week?

As stock prices are always based on what the world will look like in the future, not the present, the recent reactions by investors and market pricing suggest investors are counting on a speedy rebound. For the coming week:

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