LAST WEEK – KEY TAKEAWAYS

Markets: Shares react to economic data

• Global shares started the week on a positive note, boosted by figures suggesting the Chinese economy was showing signs of recovery following the coronavirus outbreak (see ‘Asia’ section);
• However, concerns about the potential number of deaths in the US and the impact of the virus on the global economy, particularly on US employment, weighed on the markets later in the week (see ‘US’ section).
• Omnis view: The markets appear to have stabilised following the severe turbulence in March caused by the spread of the coronavirus outside China. They are likely to remain sensitive to the effectiveness of global efforts to combat the virus and may continue to fluctuate until the number of new cases in the US and Europe starts to decline.

Asia: Chinese slowly returning to work

• Chinese industrial activity rebounded in March after it was dragged down in February due to measures taken to contain the spread of the coronavirus.
• Omnis view: The increase in industrial activity is encouraging as it signals that Chinese people are returning to work. However, it was recovering from a low level, so the country’s economy still has some way to go before it is back to full capacity.

US: Unemployment rises as country locks down

• Further evidence of the economic impact of the coronavirus emerged as the number of people claiming unemployment benefits in the US jumped to 6.6 million[1];
• Later in the week, the non-farm payroll report, a key measure of the US jobs market, revealed that employment fell by over 700,000 in March, its biggest drop since 2009[2].
• Omnis view: As the world’s largest economy, what happens in the US inevitably impacts the global markets. However, the US$2 trillion worth of emergency measures approved by US senators at the end of March should help the economy recover, and further support could be on the way.

Oil: Prospect of truce boosts prices

• The impact of the coronavirus on demand and the price war between the Organization of the Petroleum Exporting Countries (OPEC) and its partners weighed on oil prices which fell at the start of the week;
• However, they rallied after US President Donald Trump claimed to have brokered a truce between the two sides.
• Omnis view: Energy-heavy stock markets should benefit if OPEC and its partners agree to cut production when they meet this week, but demand will not fully recover until global economic activity increases.

LOOKING AHEAD - TALKING POINTS

Economic data

• Thursday- UK economic growth in February;
• Friday- Chinese inflation rate in March; US inflation rate in March.

1 https://www.dol.gov/ui/data.pdf

2 https://www.bls.gov/news.release/empsit.nr0.htm