MARKET BRIEFING: Monday 27th April 2020
THE WEEK AHEAD: Sunday 26th April 2020
The unenviable task of easing lockdown restrictions
This week we are likely to get a number of updates from across the globe on more detailed plans as to the unwinding of lockdown and a relaxing of confinement measures aimed at suppressing COVID-19.
Monday sees UK Prime Minister Boris Johnson return to the fold as he remains under pressure given the government's handling of the health crisis so far. His deputy Dominic Raab rejected fresh calls this weekend for an early easing of lockdown measures amid growing pressure from industry groups as well as cabinet officials on the delicate balance of controlling a second outbreak whilst re-opening the economy.
A report in the FT suggests that half of the UK's SMEs will run out of cash in 12 weeks, according to the Association of practising Accountants and the UK BRC have tabled a proposal to re-open shops with security guards on the door to enforce social distancing rules.
Meanwhile in mainland Europe, the French government will unveil their latest plans on Tuesday, entitled the "national deconfinement strategy", while Spain looks set to further relax measures next weekend after reporting its smallest increase in deaths in more than a month.
On a more international scale, US President Trump has sought to protect himself from direct criticism on the handling of the outbreak and his 'disinfectant injection' comment made last week. In reaction, the President has called for an end to the daily White House press briefings citing hostile journalists and inaccurate reporting. The move comes as confirmed cases in the US closes in on 1mln and the death toll has now crossed over 50k, with 32% of those occurring in New York City.
My current view here is that governments will continue to follow a cautious approach given the direct implication on human lives, so expect more missed deadlines and growing frustration from both the business community and general public at large.
Central bank decision week
The Bank of Japan, Federal Reserve and European Central Bank all hold their interest rate meetings and press conferences this week. Given the necessity to move quickly, central banks have already adopted crisis measures so the meetings should be more about the details rather than the introduction of brand new measures.
Last Thursday's report in the Nikkei suggested the BoJ will discuss shifting to unlimited purchases of government bonds in response to COVID-19 and will weigh doubling yearly purchases of corporate bonds and commercial paper to help assist cash-strapped businesses finance their operations. Meanwhile, the ECB last week eased restrictions on the collateral banks can put forward in exchange for liquidity, accepting so-called 'fallen angels' (more info on this HERE).
The latest economist survey via Bloomberg last week saw 27% of respondents expecting the ECB to boost its QE programme by as soon as this Thursday with most seeing an eventual enhancement to EUR 1.5trl. For me the size and timing of this is largely dependent on what compromise European governments can come together with, meaning that the announcement of a QE boost this week is relatively low.
This was a trending hashtag throughout most of the weekend with lots of rumours circulating regarding the health of the North Korea leader. Rather than speculate I'd rather focus on planning for who might his successor be in the event of his inability to perform his duties or passing away. In this respect, his sister Kim Yo Jong has been flagged as the likely interim leader having formally served as a vice director of the ruling Workers' Party' Central Committee and also the unofficial chief of staff, according to Reuters.
Even if there is an unexpected leadership change I don't see this having a long lasting impact on markets as the regime is deeply embedded and I do not see any change of leader as changing North Korea's stance in the global order or geopolitical matter of things.
Busy week for US earnings
24% of the S&P 500 have now reported Q1 results and this week we will see another 172 S&P 500 companies and 12/30 DJIA components. Big tech firms such as Apple, Amazon, Microsoft and Facebook are all on the docket as well as Dow heavyweight Boeing and energy majors ExxonMobil and Chevon.
A full list of the most anticipated earnings releases can be seen in the table below via Earnings Whispers.
Have a great week ahead and remember to subscribe to the Amplify Trading YouTube Channel to catch my daily market briefings.
Head of Market Analysis
Monday: CN Industrial Profit, FR Jobless Seekers, US Dallas Fed Manufacturing Business Index, 2/5-yr Note Auctions, UK PM Johnson Returns To Work
Tuesday: JN BoJ Interest Rate Decision, Press Conference, Core CPI, Unemployment Rate, UK CBI Distributive Trade Survey, 10-yr Auction, US Goods Trade Balance, Wholesale Inventories, CB Consumer Confidence, Richmond Manufacturing Index, 7-yr Auction, Weekly API Inventories, NZ Trade Balance, Unemployment Rate, FR Government End Lockdown Plans Announced
Wednesday: AU CPI, GE Import Price Index, CPI, 10-yr Auction, SP Retail Sales, IT PPI, EU Business Climate, Consumer Confidence, Services/Industrial Sentiment, UK BRC Shop Price Index, 30-yr Auction, US GDP (P), Core PCE Prices, Real Consumer Spending, Pending Home Sales, FOMC Interest Rate Decision, Press Conference, Weekly DoE Inventories
Thursday: AU Import Price Index, CN Manufacturing PMI, Non-Manufacturing PMI, JN Industrial Production, Housing Starts, Household Confidence, GE Unemployment Rate, Unemployment Change, FR/SP CPI, SP Current Account, IT CPI, GDP, Unemployment Rate, EU Interest Rate Decision, Press Conference, CPI, GDP, Unemployment Rate, UK Gfk Consumer Confidence, Nationwide HPI, US Weekly Jobless Claims, Core PCE Price Index, Employment Cost Index, Real Personal Income/Spending, Chicago PMI, Dallas Fed PCE, CA GDP
Friday: Labour Day Holiday(CN/GE/IT/SP), AU Manufacturing PMI, New Home Sales, PPI, Commodity Prices, JN Tokyo CPI, UK Manufacturing PMI, Mortgage Approvals/Lending, M4 Money Supply, BoE Consumer Credit, US Manufacturing PMI, Construction Spending, Baker Hughes Rig Count
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