Weekly Outlook (06-10 April)

It will be a shortened trading week with major markets closed on Friday. However, the coronavirus data will continue to keep investors alert.

Cases of the virus are still increasing worldwide, and the U.S. has the highest figures outpacing significantly Italy, Spain. As of Sunday evening, there were more than 330,000 confirmed cases in the U.S. with above 9,500 confirmed deaths, according to John Hopkins data.

According to RBC’s March 2020 Equity Investor Survey, the outlook surrounding the coronavirus is paramount for the markets. RBC found that “78% believe that a decline in new coronavirus cases in the US is needed for the equity market to stabilize. Additionally, 54% believe that significant progress on new drugs to treat the coronavirus and/or a vaccine is needed for stabilization.”

Amid the COVID-19 pandemic, the oil price war between Saudi Arabia and Russia has put additional pressure on markets. Oil will be tested again this week after a virtual meeting, scheduled tentatively on Thursday, between the OPEC+. The purpose of the meeting is to discuss cutting production by about 10%, or 10 million barrels, President Donald Trump first revealed the news in a tweet April 2. Despite this, even a 10million cut is unlikely to be enough to push prices up much higher from here with demand on the floor, which means that markets can witness defaults in the US crude producer sector in the coming weeks.

The detrimental economic impact of COVID-19 is expected to continue, and data released this week will reflect the damage.

The number of Americans filing for unemployment will likely remain in the millions this week. Record-breaking 6.648 million claims were filed the week ending March 28. Currently, economists “see more reasons to expect an increase in claims than a decrease”.

Key data to keep an eye on include:
• Monday & Tuesday: German factory orders (Previous -1.9%, Expected -5.5%) & industrial production (Previous -1.3%, Expected -3.9%) for February – volatile numbers for the last months. Data is unlikely to be positive as China on lockdown for all February, and Germany being one of China’s leading exporters.
• Wednesday: US Federal Reserve minutes from the emergency meeting on March 15. It would be an interesting reading as there wasn’t complete unanimity in the decision.
• Thursday: UK gross domestic product for February (Previous -0.1%, Expected -0.05%): Numbers aren’t expected to be cheery, as February floods are likely to have impacted the economic activity.