Daily market review

United States

Risk appetite recovered Monday as the market appeared more optimistic that COVID-19 deaths may be peaking in Europe and in New York, even as top public health officials said the US is struggling to control the pandemic and news late in the session that UK Prime Minister Boris Johnson had been admitted into emergency care. The Dow industrials rose 7.7 percent, the S&P 500 gained 7.0 percent, and the NASDAQ was up 7.3 percent.

Markets rallied across the board after seizing on news that deaths in New York State were flat in the last two days after rising sharply for weeks, and that hospitalizations and intensive care admissions declined. Markets traded up on news of declining death rates in Europe, and reports that European governments were working on plans to ease strict lockdowns. Energy stocks underperformed amid uncertainty over prospects for an accord among oil producers to limit supplies.

Markets chose not to focus on reports US fiscal stimulus is not being fully implemented, even as job losses and economic damage mount. Nor did markets focus on widespread expectations that COVID-19 cases are expected to rise sharply across the US, and elsewhere.

In company news, Wayfair, the furniture retailer, rose 42 percent amid strong demand for its online shopping service, including home office equipment. Carnival, the beat-up cruise line owner, rose 20 percent after the Saudi sovereign wealth fund disclosed a huge stake. Immunomedics, a biopharma, rocketed 100 percent on positive clinical news for its breast cancer drug. Walmart rose 5.4 percent on continued strong demand for consumer staples. On the downside, Zoom, the online meeting company, fell 4 percent on negative analyst comments after its recent rally.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell by US$1.35 to US$33.03, while gold rose US$62.8 to US$1,708.50. The US dollar was mixed against most major currencies. The US Treasury 30-year bond yield rose 6 basis points to 1.27 percent while the 10-year note yield rose 7 basis points to 0.67 percent.


Preliminary data suggesting COVID-19 deaths may be peaking in Europe and hopes for easing of lockdowns cheered equities Monday. The Europe-wide STOXX 600 rose 3.7 percent, the German DAX rose 5.8 percent, the French CAC gained 4.6 percent, and the UK FTSE-100 rose 3.1 percent.

Markets focused reports of declining death rates in Italy, Spain, and France, and reports that governments in Europe are preparing to ease lockdowns that have stalled the region's economy. Energy stocks were in focus amid frenetic maneuvering among major oil producers ahead of a meeting now expected later in the week to discuss an oil output pact.

Auto stocks rallied to help Germany lead the gains, with beat-up travel & leisure also outperforming as all sectors rose. Construction & materials, and banks also led gainers. Oil & gas stocks lagged as oil prices fell as markets remained uncertain over prospects for a deal to limit oil production.

Among companies, Rolls-Royce, the UK automaker and airplane engine company, advanced by 18 percent after announcing cost cuts and abandoning its guidance and dividend. Hennes & Mauritz, the Swedish clothing retailer, rose 11 percent after an upgrade at Societe Generale. EasyJet, the budget airline, rose 16 percent after its founder pressed management for changes.

Asia Pacific

Major Asian markets posted strong gains Monday. Coronavirus developments were again the main focus of investor attention, with concerns about the near-term outlook for the United States offset by signs that growth in cases is moderating elsewhere. Singapore's government announced a third stimulus package worth around $3.6 billion Monday, with investor sentiment also boosted by expectations that Japan's government will announce significant additional spending this week. The drop in oil prices after the planned meeting between Russia, other oil exporters, and OPEC was postponed also provided support to regional markets.

Japan's Nikkei and Topix indices were among the stronger performers, closing up 4.2 percent and 3.9 percent respectively, despite reports that the government plans to declare a state of emergency this week. Australia's All Ordinaries index also rallied, closing up 4.2 percent, with major banks and energy exporters posting strong gains. Hong Kong's Hang Seng index rose 2.2 percent on the day, while Chinese markets were closed for a national holiday.

The Markit PMI for India's services sector fell from a seven-year high of 57.5 to 49.3 in March, indicating contraction in the sector for the first time since October 2019. The manufacturing PMI survey for India, published last week, showed a fall in its headline index from 54.5 to 51.8. These moves resulted in the composite index falling from 57.6, an eight-year high, to 50.6.

Looking ahead*

On Tuesday in Asia/Pacific, Japanese household spending, Australian merchandise trade, and the RBA policy announcement are due. In Europe, German industrial production, French merchandise trade, UK Halifax HPI, and Italian retail sales reports are scheduled. In US data, the JOLTS report is on tap, and in Canada, the Ivey Purchasing Managers' Index.

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