Market Update

Amidst the prevailing uncertainty surrounding the coronavirus, global equity markets typically experienced sell-offs towards the end of the week. However, defying this trend, and despite the shortened week due to the Easter holidays, global equity markets concluded the week on a positive note.
While the US reported a rise in weekly jobless claims by 6.61 million, bringing the total to nearly 17 million in the past three weeks, the Federal Reserve (Fed) stole the spotlight by unveiling plans to provide up to $2.3 trillion in loans to support various sectors of the US economy. The central bank's initiative targeted junk bonds, commercial loans, mortgages, municipal debt, and loans to businesses, aiming to mitigate the fallout from the coronavirus.
Fed Chair Jay Powell's announcement of a weak second quarter followed by a rapid rebound in the second half of the year echoed predictions made previously. Equities were further buoyed by signs indicating that new coronavirus cases might have peaked, leading to a reduced estimate of around 60,000 total deaths in the US, down from the previous projection of up to 240,000 just over a week ago. Consequently, US equities experienced their most substantial weekly gain since 1974, with the S&P climbing 12.10% and the Dow Jones up 12.67%.
In contrast, the price of Brent oil ended the week approximately 12% lower following the OPEC and Russia deal to reduce oil production, which was deemed insufficient to counter the decreased demand resulting from coronavirus lockdowns. Looking ahead, the quarterly US corporate earnings season is set to commence, beginning with major banks like Goldman Sachs, JPMorgan, Citigroup, Bank of America, and Wells Fargo. Additionally, key economic events include US retail sales, the Fed Beige Book, and weekly jobless claims. China's Q1 GDP, retail sales, import/export data, and industrial production will also be closely watched.
Despite US markets being open on the day following the Easter weekend, they experienced a slight downturn, with the Dow Jones losing 1.39% and the S&P 500 down 1.01%. Investors are on edge as the quarterly reporting season begins, reflecting the severe impact of the coronavirus outbreak on companies, leading to increased provisions for bad debts due to rising bankruptcies and unemployment. Uncertainty remains high as long as lockdowns persist, making it challenging for companies to provide clear outlooks for sales and profits in 2020.
The IMF's World Economic Outlook, released today, is anticipated to reflect the unpredictable nature of the current situation. Government and central bank stimulus measures are expected to alleviate economic damage, but until the world emerges from the pandemic, elevated equity market volatility will persist due to the prevailing uncertainty.
Positive sentiment was supported by better-than-expected economic data from China, indicating the country's rapid restart after its lockdown. Chinese exports fell by only 6.6% in March, outperforming expectations of nearly 14% decline, and imports decreased by just 0.9%, contrary to the estimated 9.8% drop. This data underscores China's swift recovery and the strength of the Asian economy amid ongoing lockdowns in the UK, US, and Europe.