Markets Weekly

17 April 2020

4 minute read

Week ahead

Financial markets remain focused on how the coronavirus pandemic develops and on survey data showing the impact the pandemic is, or will have, on the global economy.

In the eurozone and UK, April’s IHS Markit flash purchasing managers’ indices (PMI) will be published this week. In March, the services sector in both areas recorded its worst readings on record, with the eurozone figure down 23.8 points to 28.4 and the UK reading dropping 17.6 points to 35.7 (a reading below 50 suggesting that output is likely to shrink). Furthermore, the manufacturing sector also weakened to 44.8 from 49.1 and 48.0 from 51.9 respectively.

In the US, investors will also closely monitor April’s IHS Markit’s flash PMIs for an indication on the impact of quarantine measures for both the services and manufacturing parts of the economy. March’s figures slid to 39.8 and 48.5 respectively.

As the drastic quarantine measures from the outbreak persist, and with both sectors facing significant difficulties, the readings next week are likely to remain weak across all regions.

The latest US jobless claims data on Thursday will also grab the attention of investors, with the indicator close to recent record highs.

In Germany, recent survey data, such as the ZEW research institute’s economic sentiment index, has been noticeably weak, with the latest reading being -49.5. Friday’s Ifo institute’s business climate survey data for April will provide more evidence for investors to assess the hit to confidence stemming from the COVID-19 pandemic.

Chart of the week

Biden divides and conquers

As the world focuses on the effects of the COVID-19 pandemic, November’s US election draws closer. The battle for the Democratic Party’s presidential nominee has already been eventful. After many political commentators wrote former vice president Joe Biden’s chances off after he came fourth at the Iowa caucus and fifth at the New Hampshire primary, they are now eating their words.

Candidates such as Pete Buttigieg and senators Amy Klobuchar and Elizabeth Warren failed to build any real momentum. That paved the way for Biden to be the main contender against senator Bernie Sanders for the majority of the 1991 pledged delegates.

After his first primary win in South Carolina in late February, Biden took 10 of the 14 states up for grabs on Super Tuesday. He then triumphed in Idaho, Michigan, Mississippi, Missouri, Washington, Arizona, Florida and Illinois in March.

After initially being the frontrunner, Sanders bowed out of the race on 8 April as successes in New Hampshire, California, Colorado and North Dakota delivered 378 pledged delegates against Biden’s 1286.

Chart of the week

The key date to look out for now is 17 August when Biden seems set to be unveiled as the Democratic presidential candidate at the convention.

As President Donald Trump takes on several state governors in fashioning America’s response to the pandemic, the challenge for Biden is to unite an incredibly diverse party and galvanise those that originally backed Sanders. That appears to be the best chance of providing a real challenge to President Trump.


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