By IFCMarkets
On Tuesday, US stock quotes rose in the absence of any significant macroeconomic news. The main positive fact was the reduction in the number of Covid-19 cases per day in New York to a minimum from March 24 – 1649 people compared with 1958 people on Monday. Apple’s stocks grew by 5% due to signs of sales recovery in China. The growth leaders were the securities of the American travel companies Royal Caribbean Cruises (+ 13.4%) and Carnival Corporation (+ 8.7%). The S&P 500 (+3,06%), Nasdaq (+3,9%) and Dow Jones Industrial Average (+2,39%) indexes rose yesterday. Since the beginning of April, the S&P 500 has risen 15%. Today, US stock futures have declined markedly. The IEA published a very negative forecast for global oil demand. Shares of European oil companies plummeted, pulling along the entire global stock market. Today data on retail sales and industrial production for March will be published in the US. The ICE exchange dollar index rose today. Demand for the US currency increased as a result of the poor IMF forecast of a 3% decline in world GDP this year. Investors consider US dollar more reliable in comparison with the currencies of other countries.
European stocks are getting cheaper after the IMF forecast of a 3% drop in the world GDP. At the same time, the decline in European countries GDP may turn out to be even more significant. For example, the IMF expects France’s GDP to fall by 8% this year. European and American companies reporting season covering the 1st quarter of 2020 has now begun. Due to weak reports, the shares of Jupiter Fund Management, a British investment manager, fell by 7%. For the same reason, quotes of Danish companies TomTom (-3.4%) and ASML Holding (-2.2%) decreased. Regarding the United States, market participants so far expect a reduction in the total profit of S&P 500 companies list by 12.3% in the 1st quarter of this year and another 23.6% in the 2nd quarter. No important macroeconomic data were released in the EU either yesterday or today. The euro depreciated amid the IMF forecast of a significant drop in GDP of European countries.
Cheap oil is likely to support the Japanese economy and Southeast Asia as a whole. Today, the Japanese Nikkei lost only 0.45% and the Chinese Shanghai Composite – 0.57%. China released good foreign trade data for March. The account surplus remained. Exports reduced by only 6.6%, which is much less than the forecast (-13.9%). The Central Bank of China lowered bank reserve rates and regulations in order to support mainland Chinese companies affected by the coronavirus pandemic. Accordingly, today’s drop in the Hong Kong’s Hang Seng index was more noticeable than the Shanghai Composite and amounted to 1.2%.
Brent futures are being traded above the psychological level of $ 30 per barrel. International Energy Agency published an apocalyptic forecast for oil. It expects a reduction in world oil demand in April 2020 by 29 million barrels per day (bpd), in May – by 26 million bpd and in June – by 15 million bpd compared to the same months of 2019. At the same time, the agency expects that countries not included in OPEC + will reduce oil production by only 3.5 million bpd. In this case, the cumulative decline in production of all countries will not be 20 million bpd (as announced at the OPEC + meeting), but only 13.5 million bpd. Official data on oil reserves in the US, important for the market, will be published today. According to forecasts, reserves will grow by 10-13 million barrels, which could be an additional negative factor for oil prices.
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