Equity Markets
Risk sentiment was buoyed throughout most of the trading session, backed by more countries easing lockdown restrictions and a surge in crude oil prices. However, Federal Reserve Vice Chair Richard Clarida made some comments in an interview on Tuesday, dampened the upbeat tone:
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“We’re living through the most severe contraction in activity and surge in unemployment that we’ve seen in our lifetimes,” and “unfortunately, the unemployment rate is going to surge to numbers that we’ve not seen probably since the 1940s.”
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Wall Street ended in positive territory but pared around half of the gains during the final hour of trading:
- Dow Jones Average Industrial added 133 points or 0.6% to 23,883.
- S&P500 rose by 26 points or 0.9% to 2,868.
- Nasdaq Composite added 98 points or 1.1% to 8,809.
Currency Markets
In the FX space, major currencies were mixed against the US dollar and commodity-linked currencies were among the best performers.
The US dollar, which tracks the performance of a basket of currencies against the greenback, edged higher during the US session. Given that the Euro accounts for a bigger percentage of the weighted value, the weakness in the shared currency, as opposed to other currencies, lifted the index to the 99.85 level.
The GBPUSD pair struggled to find traction as the UK and has become the new epicentre of the virus. The country recorded the highest number of coronavirus deaths in Europe surpassing Italy.
On the economic front, the surveys of the economic activity in the US non-manufacturing sector were released reflecting a contraction for the first time since the financial crisis.
- Business Activity Index at 26%
- New Orders Index at 32.9%
- Employment Index at 30%
- Supplier Deliveries Index at 78.3%
Overall, the ISM reported a Non-Manufacturing PMI of 41.8 percent, 10.7 percentage points lower than the March reading of 52.56 percent. The contraction marks the lowest since March 2009.
Commodities
In the oil market, crude oil future prices continue to edge higher as production cuts are kicking in. The cuts are expected to slow down the speed at which storage tanks are filled alleviating some of the pressures on the storage side. Inventory levels are also closely monitored and traders found support on the API weekly crude oil which shows that the stock is down to 8.44M in May 1 from the previous 9.978M.
WTI Crude oil (Nymex) has gained 3.42% and is currently trading at $25.40 while Brent Crude (ICE) is trading at 30.97, up by 13.86%. Brent Crude futures are trading above the $30 mark for the first time since April.
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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Shopify (NYSE: SHOP)
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Wednesday 06 May, before markets open
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Conference call 8:30 AM (ET)
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PayPal Holdings, Inc. (NASDAQ: PYPL)
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Wednesday 06 May, after markets close
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Conference call 5:00 PM (ET)
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General Motors Co. (NYSE: GM)
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Wednesday 06 May before markets open
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Conference call 10:00 AM (ET)
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