After weeks of continued disruption and downside, last week brought a slight reprieve in the financial markets. Whilst all markets remained volatile, that volatility was confined to tighter ranges, with stock markets finally forcing their way of the March lows.  This comes even despite the severe stresses Covid - 19 is putting on the economy across the globe.  In the US where they remain in the midst of surging cases we are already seeing meaningful economic impacts as following on from last week's data showing 3 million new unemployment claims, it was forecast last week's data could be at a similar level, only for it to double to 6.6 million.

This is of course a reflection of the enforced lockdown, shutting down companies and stifling employment. However the effects of the drop in Oil caused by the ongoing dispute between the US, Saudi Arabia and Russia plays a significant role in unemployment claims in the US. The dispute remains ongoing, with OPEC talks scheduled for today looking to be postponed now until Thursday. Price action suggests that there is hope an agreement will be reached, as we start the week around 28 US dollars per barrel up from 20, and this despite tensions still running high. However, despite Russia and the Saudi’s enjoying their advantageous position, with the US currently toiling, these levels remain unsustainable and damaging for all parties, hence the markets bottoming out, for now. 

In Europe the Euro starts the week on a firmer footing also after case and death numbers saw an improvement in France, Spain and importantly Italy. This shows the first signs that we are getting to that all important turning point yet to be reached in the UK and US. There were even reports in the press that Italy may be looking to plan the exit strategy to mobilize citizens and the economy, knowing that being the most impacted and first Western nation to deal with this, they will be under the watchful eye of the western world. The articles hint that they could look to kickstart this project in mid May if cases continue to retreat to a manageable level. 

In the UK last week the main headlines were centered around Prime Minister Boris Johnson’s infection of the virus and his admission to hospital for treatment. At this stage it is just believed to be precautionary. The opposition leadership race was also finalised with Keir Starmer emerging victorious, a politician with a strong track record and a background that party supporters will embrace. As the virus continues to grip the UK with cases growing and the healthcare system stresses increasing, businesses and employees are still feeling the pain as whilst the government and Central Bank outlined plans for support, the initiatives are as yet unavailable to access, failure from the government to get the money flowing could bring firstly pain to small businesses and the self employed, before moving up the chain to the larger businesses. 

In the week ahead we continue to focus on the two major  events encapsulating the economy in the virus and oil dispute. US Unemployment numbers on Wednesday will again be top of the markets radar even more so than the Federal Reserve's meeting minutes on Wednesday night. It will be a shorter trading week with the Easter holidays coming either side of next weekend. 

The Week Ahead:

Monday:

•       Factory Orders – DE
•       Construction PMI – DE, FR, IT, Eurozone, UK
•       Consumer Inflation Expectations - US

Tuesday:

•   Interest Rate Decision – AUS
•   Industrial Production – DE
•   Halifax House Price Index – UK
•   Ivey PMI – CAN
•   Consumer Credit Change - US

Wednesday:

•       Machinery Orders – JAP
•       MBA Mortgage Applications - US

Thursday:

•       Consumer Confidence – JAP
•       GDP Growth – UK
•       Industrial Production – UK
•       Jobless Claims – US
•       Michigan Consumer Sentiment - US

Friday:

•   Inflation Rate – CHI
•   Inflation Rate – US