Daily market review

United States

Talk of a gradual reopening of economic activity by US states gave risk assets a boost Friday, along with a positive report on a COVID-19 treatment. The Dow industrials gained 3.0 percent, the S&P 500 rose 2.7 percent, and the NASDAQ was up 1.4 percent.

President Trump's guidelines for a phased reopening of many public facilities unveiled Thursday, and reports of near-term moves by some governors to lift restrictions conveyed the sense that the pandemic may be easing. Markets were entranced by a report by the STAT medical news publication that Gilead's remdesivir had helped COVID-19 patients recover in a limited trial. Gilead rose 8.5 percent on the news.

All sectors gained, with industrials, energy, and financials leading. Consumer staples and technology lagged but still advanced. Among companies in the news, Boeing surged 15 percent after saying it would restart aircraft production next week at its Washington State plants. Procter & Gamble, the consumer staples leader, rose 2.6 percent on an earnings beat, despite lowering its 2020 guidance.

In US economic news, the leading economic indicators dropped by a record 6.7 percent in March in what the report described as sudden and broad-based deterioration among its 10 components, especially for unemployment claims, which have continued to mount in April, and in stock prices, which have since recovered strongly. But recovery isn't the theme of this report, which warns that the US is "facing a very deep contraction."

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose by 21 cents to US$28.27, while spot gold fell US$38.83 to US$1,680.66. The US dollar fell against most major currencies. The US Treasury 30-year bond yield rose 5 basis points 1.27 percent while the 10-year note yield rose 3 basis points to 0.65 percent.


Hopes for reopening economies in Europe and the US lifted equities indexes Friday. The Europe-wide STOXX 600 jumped 2.6 percent, the German DAX gained 3.2 percent, the French CAC rose 3.4 percent, and the UK FTSE-100 was up 2.8 percent.

Among sectors, travel & Leisure, autos, industrials, basic resources, and construction led the winners, while defensives lagged, including utilities, telecom, health care, and personal & household goods.

Among companies in focus, big miner Rio Tinto rose 3.3 percent after projecting a rebound in Chinese demand, and as commodities prices popped up. LVMH Moet Hennessy, the French luxury goods leader, rose 4.4 percent, and Volkswagen was up 6.4 percent despite bleak first quarter results, and pulling their guidance.

In economic data, Eurozone inflation decelerated sharply in March. The final data put the annual rate at just 0.7 percent, unrevised from its flash print and so still down fully 0.5 percentage points from February's final 1.2 percent. This equaled its lowest level since November 2016 and the monthly decline was one of the steepest on record.

Asia Pacific

Major Asian markets closed the week with solid to strong gains Friday, with sentiment boosted by reports late Thursday that trials for a drug used to treat coronavirus patients had had positive results. Chinese economic data published Friday showed major activity indicators improved in March. Japan's Nikkei and Topix indices were among the stronger performers in the region, advancing 3.1 percent and 1.4 percent respectively on the day and closing the week up 2.0 percent and 0.9 percent respectively. The Shanghai Composite index closed up 0.7 percent on the day and 1.5 percent on the week, while Hong Kong's Hang Seng index closed up 1.6 percent the day and 0.3 percent on the week. Australia's All Ordinaries index gained 1.4 percent on the day and 1.9 percent on the week.

Chinese GDP data published Friday showed a sharp contraction in domestic activity for the first quarter of the year, but monthly data showed month-on-month gains in March, indicating that the economy has started to recover to some extent from the initial impact of the coronavirus outbreak at the start of the year. GDP fell 9.8 percent on the quarter in the three months to March after increasing 1.5 percent in the three months to December, while year-on-year GDP growth weakened from an increase of 6.0 percent to a decline of 6.8 percent, somewhat weaker than the consensus forecast for a fall of 6.0 percent. This is the first year-on-year fall in GDP on record.

Monthly activity data for March showed some improvement after extreme weakness in February. Industrial production surged 32.13 percent on the month in March after slumping 24.19 percent in February, retail sales rose a modest 0.24 percent after falling 3.64 percent previously, and fixed asset investment increased 6.05 percent after dropping 22.13 percent previously. All three indicators fell in year-on-year terms in March but to a lesser extent than they did in the first two months of the year. Speaking after the release of the data, officials expressed confidence that economic conditions will improve further in coming months.

Singapore's non-oil domestic exports rose 17.6 percent on the year in March after increasing 3.1 percent in February, while total imports rose 0.3 percent on the year after increasing 9.4 percent previously. The increase in headline exports growth was mainly driven by stronger demand from regional trading partners, perhaps reflecting shifts in supply chains during the initial impact of the global coronavirus pandemic. These offset weaker year-on-year growth in Singapore's exports to major economies, including the United States, China, Japan, and the European Union. These data suggest that the full impact of the pandemic on regional trading flows had yet to take place in March but could intensify in coming months.

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