LAST WEEK – KEY Takeaways

Markets: Slowing pandemic and US support measures boost shares

• Global shares rallied as the spread of the coronavirus appeared to slow and the Federal Reserve (US central bank) took further steps to support the US economy (see below).
• Omnis view: The markets are starting to look forward to an end of the worldwide shutdown. However, shares could fluctuate in the meantime as news emerges about economic growth and company profits, while the number of new cases may pick up again as people go back to work.

US: Fed announces new measures

• The Federal Reserve will provide an extra US$2.3 trillion of loans during the coronavirus crisis, extending its support to small businesses and local governments;
• Meanwhile, the number of claims for unemployment benefits jumped by over six million for the second week in a row, according to the Department of Labor[1].
• Omnis view: The markets will welcome the Federal Reserve’s announcement as it should help to protect jobs and businesses. There could be more good news for the US economy this week as politicians discuss further measures worth up to US$500 billion.

UK: Bank of England to fund government spending

• The Bank of England (BoE) announced that it would directly fund the government’s spending aimed at offsetting the impact of the coronavirus on the UK economy.
• Omnis view: The BoE has used this tactic before, but it should be on a much bigger scale on this occasion and it should accelerate the UK’s economic recovery.

Europe: Finance ministers agree on emergency measures

• European finance ministers agreed on an emergency package of measures worth €500 billion, including extra lending and unemployment insurance, to support the EU economy as it tries to reduce the impact of the coronavirus.
• Omnis view: A coordinated response from the EU is important because it will reassure the markets about the capacity of the region’s economy to recover.

Oil: OPEC and partners agree to cut output

• The Organization of the Petroleum Exporting Countries (OPEC) and its partners agreed on record cuts to production in an effort to support oil prices which have fallen as the coronavirus has weighed on global demand.
• Omnis view: Oil prices initially rallied after the agreement was announced, although they handed back some of those gains due to concerns that the cuts would not make up for the fall in demand.

LOOKING AHEAD - TALKING POINTS

Economic data

• Tuesday- Chinese imports, exports and balance of trade in March;
• Friday- Chinese economic growth in the first quarter of 2020.

1 https://www.dol.gov/ui/data.pdf