Week from 13 to 19 April 2020
The U.S. Labor Department reported Thursday that jobless claims had surged by 5.2mio last week, bringing the four-week total to 22mio. In one word, this data wipes out a decade of job gains! Economic effects of lockdowns imposed around the world are also reflected in retail sales. They fell by 8.7% in the U.S. in March. Same grim data for manufacturing output which plunged 6.3% the same month. In Asia, the Chinese economy contracted in the first quarter (GDP down 6.8% from the same period a year ago), its worst result since the country began sharing quarterly economic data in 1992.
Despite this gloomy and stressful environment, global stocks ended the week on the front foot. The S&P500 gained 3.04% at 2,874.56 (now close to a key resistance) and the Nasdaq Composite added 6.09% as investors seemingly upped bets on large-cap tech stocks, especially on FAANG names (e.g. Amazon up 16.26% WTD, Netflix up 14.09%). Technology was also one of the best S&P sectors over the week (+4.79%), just behind healthcare (+6.14%) and consumer discretionary (+7.86%) on hopes economic activity could get back to normal sooner. Surprisingly, energy did not lose ground (+0.21%) even though oil prices declined sharply (once again, WTI crude down 19.73%) with extreme levels of oversupply and floating storage becoming more and more expensive as traders compete for ships. Among the sectors battling at the back of the pack, financials significantly lagged the broader market rally (-4.03%), as the Q1 results posted by banks flagged further economic pain ahead. In the same vein, small-cap stocks were downshifting (Russell2000 down 1.41%).
Outside the U.S., European markets treaded water (MSCI EMU down 0.39%) while Asian indices moved higher (Nikkei225 up 2.05%, Shanghai Composite up 1.5%, BSE Sensex up 1.38%).
On the interest rate front, it is worth noting that all the asset classes finished the week in positive territory. Sovereign bond yields declined a bit (10-year U.S. Treasury yield to 0.65% from 0.73%, 10-year Bund yield to -0.47% from -0.35%) and the 3-month U.S. T-Bill rate slid to 0.12% from 0.25%.
Investment grade corporate bonds notched their fourth week of consecutive gains (+1.77% in the U.S., +1.03% in the eurozone). High-yield bonds fared well too (+2.11% WTD in the U.S., +1.79% in the eurozone) and emerging debt managed to follow suit, though to a lesser extent (+0.60% in local currencies).
Lastly gold futures dropped 2.71% to $1,689.20 a troy ounce.
Find the full report here: https://www.trackinsight.com/en/weekly-flow-report/2020-04-17/global