On Friday, US stock markets failed to join the recovery trend on European and Asian stock markets, ending one of the worst weeks in the history of Wall Street. The Dow Jones Industrial closed on Friday with a minus of -4.55%, its lowest level since November 2016. Last week, the leading index lost -17% lower overall, the largest weekly loss since 2008. The market-wide S&P 500 also closed with a negative weekly balance of -15%. US equities have thus already fallen by more than -30% from their mid-February high. However, the pandemic in the US appears to have only just begun and it remains to be seen whether the largest economy will find an adequate remedy for the crisis. In Asia, the stock markets opened the new trading week mostly in negative territory. While the Nikkei 225 Index in Tokyo rose by around +2% - a catch-up effect because the Tokyo Stock Exchange remained closed on Friday - most indices, especially those of the Chinese stock markets, suffered further heavy losses. In Hong Kong, the Hang Seng Index starts the new week with a slump of around -4%. The Shanghai and Shenzhen stock exchanges lost a good -2%.
We are currently registering 339 234 cases of coronavirus infections worldwide, with 14 703 confirmed deaths. The situation remains alarming, especially in Italy and Spain. In Italy, the number of deaths continues to rise sharply and currently stands at 5 476, while Spain reported around 1 700 deaths from COVID-19.
Investors are eagerly awaiting the US economic stimulus package against the corona pandemic. A decision could already be made today on Capitol Hill in Washington. According to the US Secretary of the Treasury Steven Mnuchin, there is a fundamental agreement between Republicans and Democrats. It is not yet clear how high the economic stimulus package will be, however, it should amount to at least USD 1 trillion (around EUR 900bn). Private households are to receive direct payments of over USD 1 200 and USD 500 per child, and special loans are to be granted to ease the burden on small and medium-sized enterprises in particular. Some USD 110bn of the aid package is also to flow into the health care system.
The European Central Bank (ECB) would act decisively and do everything within its mandate that is necessary to support the euro economy. In the German newspaper “Handelsblatt”, ECB President Christine Lagarde wrote that a large part of the economy was temporarily paralysed, threatening the existence of companies and jobs. It is an “extremely serious economic shock that requires an ambitious, coordinated and immediate policy response on all fronts”. The ECB will ensure that all sectors of the economy benefit from the recent measures taken by the central bank, such as more favourable financing conditions. This should enable the euro-area economy to cope with the shock.
The Norwegian central bank (Norges Bank) also lowered its key interest rate again on Friday from +1.0% to +0.25%, which means that the interest rate level has reached a new record low in light of the Corona crisis. The Norges Bank had already lowered its key rate on March 13th. The central bank also stated that it could not rule out a further rate cut. The Norwegian krone has depreciated significantly since the beginning of the year, but this is also due to the collapse in oil prices.
EU Commission President Ursula von der Leyen signalled to the British government the possibility of prolonging the brexit negotiations because of the Corona crisis. British Prime Minister Boris Johnson, after leaving the EU on 31st January, set himself a deadline of the end of 2020 to negotiate a treaty on future relations with the EU. According to von der Leyen, the EU Commission was ready to negotiate.
|08:00||DE||Producer Prices (y/y)||+0.8%|
|15:00||US||Existing Home Sales (m/m)||-1.3%|
|15:00||US||Existing Home Sales (y/y)||+5.5%|
Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi, +41 44 250 78 59, E-Mail: email@example.com
Source: LGT Bank (Switzerland) Ltd.
Risk Disclosure (Disclaimer)
This publication is an advertising material / marketing communication. This publication is for your information only and is not intended as an offer, solicitation of an offer, or public advertisement to buy or sell any investment or other specific product. Its content has been prepared by our staff and is based on sources of information we consider to be reliable. However, we cannot provide any confirmation or guarantee as to its being correct, complete and up to date. The circumstances and principles to which the information contained in this publication relates may change at any time. Information that has been published should therefore not be understood as implying that no change has taken place since its publication or that it is still up to date. The information in this publication does not constitute an aid for decision-making in relation to financial, legal, tax-related or other consulting matters, nor should any investment decisions or other decisions be made on the basis of this information alone. It is recommended that advice be obtained from a qualified expert. Investors should be aware that the value of investments can fall as well as rise. Positive performance in the past is therefore no guarantee of positive performance in the future. Investments in foreign currencies are also subject to fluctuations in exchange rates. We disclaim all liability for any loss or damage of any kind, whether direct, indirect or consequential, which may be incurred through the use of this publication. This publication is not intended for persons subject to legislation that prohibits its distribution or makes its distribution contingent upon an approval. Any person coming into possession of this publication shall therefore be obliged to find out about any restrictions that may apply and to comply with them. In line with internal guidelines, persons responsible for compiling this report are free to buy hold and sell the securities referred to in this report.