Markets are witnessing a moderate risk-on environment this morning following news that certain countries are looking to slowly reopen their economies. Italian stocks have so far fared very well as the nation managed to survive a ratings downgrade; S&P reaffirmed Italy’s rating at BBB. Elsewhere, the Bank of Japan announced further stimulus, pledging to buy unlimited bonds to lower borrowing costs, which has supported sentiment. Meanwhile, the delayed National People’s Congress kicked off in Beijing and will go through to April, 29.
Having suffered one of the worst weeks in history last week, oil prices will be monitored closely this week as OPEC+ production cuts come into effect on May 1st. Reports suggest that Saudi Arabia and Kuwait have cut production ahead of schedule. Central bank rhetoric will also be monitored closely this week as we hear from the Fed and ECB on their rate decisions. Meanwhile, earnings season is in full swing with a deluge of Q1’20 earnings from global financial institutions, healthcare and energy companies and tech giants (amongst others) including Apple and Microsoft, which could provide some colour on quarterly performance and forecasts during very uncertain times.
Following the sharp fall in China’s industrial profit reading (-34.9%) for March, other global data prints will be followed closely this week as the true impact of Covid-19 begins to unravel. An array of GDP numbers will be released through the week from the likes of Japan, Spain, Italy, France, the Euro-area, and US; where Q1’20 GDP is widely expected to fall, for the first time in six years, at -3.9% annualised. Labor Day on Friday will witness Trump’s "Opening up America Again" where individual governors will be responsible for setting timelines for reopening their individual states. With concerns that some states may reopen prematurely, major US businesses, which are represented by the Chamber of Commerce, are lobbying Congress for immunity against Covid-19 related lawsuits; the outcome could determine just how quickly some states decide to unwind the current federal lockdown status.