Equity Markets
US stocks staged a last-minute recovery after California, the state that has the largest economy and produced more than $3 trillion of economic output, reported the least number of virus-related deaths in weeks.
The technology and energy sectors led the gains lifted by earnings reports and an increase in crude oil prices. Airline stocks were among the industries hit the hardest as investors digested the comments made over the weekend by the billionaire investor, Warren Buffet, at his annual shareholders’ meeting. Berkshire Hathaway has sold all of its shares in the four largest US airlines.
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The shares of Southwest Airlines, United Airlines, Delta Airlines, and American Airlines all lost around 5% -8%.
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After struggling to firm to the upside throughout most of the session due to the rising tensions between the US and China, all major US equity benchmarks ended in positive territory:
- Dow Jones Average Industrial added 26 points or 0.1% to 23,750.
- S&P500 rose by 12 points or 0.5% to 2,843.
- Nasdaq Composite added 106 points or 1.2% to 8,710.
Currency Markets
A mixed sentiment around the fears of rising tensions between the US and China and lockdown exit plans drove the FX markets. The US dollar index which tracks the performance of a basket of currency rose to the 99.50 level on Monday.
Safe-haven and commodity-linked currencies were the best performers while the Pound Sterling and the shared currency were the weakest.
As of writing, the New Zealand dollar is slightly buoyed at 0.6060 level lifted by upbeat trade data:
- Final Manufacturing PMI figures for Germany came better-than-expected at 34.5 compared to 34.4 forecasted while Eurozone Markit PMI came below expectations at 33.4.
- Sentix Index tracking investors’ confidence improved slightly to -41.8. However, the survey still highlights a deep crisis for the Euroland:
- The economy in Euroland is in the middle of a deep crisis. For the fourth time in a row, the economic situation is falling to an all-time low of -73 points.
- The fact that the overall index nevertheless improves slightly to – 41.8 is due to expectations that are rising by 12.8 points. We are at the beginning of a stabilisation phase, which is already clearly visible in Germany and especially Austria.
- Internationally, hopes rest on the Asian region. In China, where the corona crisis began, the signs are already pointing to an economic upturn. Japan is also stabilising. Other regions of the world, including the USA, are still in recession.
Commodities
In the oil market, crude oil future prices gained upside momentum. May is the official month where the OPEC and non-OPEC allies will start adjusting their production to stabilise energy markets. Amid the frantic search for storage, production cuts are expected to slow down the speed at which storage tanks are filled while activities are gradually expected to also pick up following easing lockdown measures.
WTI Crude oil (Nymex) has gained 5.05% and is currently trading at $21.42 while Brent Crude (ICE) is trading at 27.20, up by 2.87%. This week’s oil reports will also be of utmost importance to gauge inventory levels.
Gold
Gold remains resilient above a key level of $1,700 despite the risk-off and risk-on environment and a stronger US dollar.
Key Economic Events
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Upcoming Earnings Report
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Company
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Reporting Time
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Teleconference/ Webcast Time
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Walt Disney Company (NYSE: DIS)
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Tuesday 05 May, after market close
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Conference call 4:30 PM (ET)
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Activision Blizzard, Inc. (Nasdaq: ATVI)
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Tuesday 05 May, after market close
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Conference call 4:30 PM (ET)
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Beyond Meat, Inc. (NASDAQ: BYND)
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Tuesday 05 May, after market close
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Conference call 4:30 PM (ET)
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