Weekly market update : Markets choose optimism

Thursday April  9

Weekly market update

At the end of a short week due to the Easter break, the financial markets have regained some color with renewed optimism about the pandemic. Despite a balance sheet that continues to worsen for the time being, operators hope that the epidemic's peak will be reached soon, which should allow a gradual resumption of activity. Risky assets have been particularly valued.

Indexes Over the past week, all geographical areas have recovered. In Asia, the Nikkei gained 8.5%, supported by the Yen's decline and the government's plan to support the economy. The Hang Seng gained 4.7% and the Shanghai Composite gained 2.2%. In Europe, the CAC40 recorded a weekly performance of 8.2% and the Dax gained 11% (see chart). For the peripheral countries of the euro zone, Portugal gained 5.4% and Spain 7%. In the United States, at the time of writing, gains are in double digits. The Dow Jones gained 13.2%, the S&P500 12.2% and the Nasdaq100 9.2%. Strong rebound in the German DAX index

Commodities All eyes are on OPEC+, which will hold a meeting at the end of the day. Operators are hoping for a solution to reduce the supply/demand imbalances that have grown significantly since the start of the pandemic crisis. The black gold producing countries must therefore agree on production cuts, the extent of which the market does not know. In this context, crude oil prices have remained volatile, with a barrel of Brent at USD 34, diverging from the price of WTI at USD 26.4. Precious metals were sought on the weekly sequence. Gold rose by 2.5% to USD 1655, while silver gained 5% to USD 15.10. All components of the industrial metals segment are gaining ground this week. Only aluminum remains under pressure at USD 1420 per metric ton.

Equities markets ASOS soars ASOS is one of Europe's leading online retailers specializing in clothing. Between Monday and Thursday, its share price almost doubled from GBp 1060 to GBp 2106, thanks in particular to two memorable sessions closed at +34% and +28%. It must be said that the share has had an apocalyptic start to 2020 and is still losing 40% compared to January 1. The surge was underpinned by the announcement of a solid performance in the first half of the financial year ending at the end of August, accompanied by an express fund-raising of £247 million and an extension of its revolving credit limit. ASOS will not emerge unscathed from the crisis, but has the resources to go round the clock for several quarters if necessary. ASOS stands for "As Seen On Screen", the original name of the company that was set up 20 years ago in Camden Town, London, by entrepreneurs who wanted to market copies of celebrity clothing on the internet. Strong rebound in Asos share price

Bond market The trend is towards increasing rates on the main European benchmarks. The French OAT, after a 0.17% rate hike, ended the week close to 0.11%, up sharply from its early March levels (-0.4%). The German 10-year OAT is still in negative territory at -0.34%, as is the Swiss OAT at -0.28%. Still in Europe, the Italian construction sector stabilised at 1.6%. On the other side of the Atlantic, the American 10-year-old is showing remarkable stability while the country's economic statistics are vacillating. The T-bond thus posted a return of 0.73%.

Forex market Weakened by the failure of European ministers' negotiations to provide a common response to the health crisis on a European scale, the euro nevertheless had the luxury of gaining ground against the greenback. As a result, the US dollar has collapsed as traders gradually regained an appetite for risk. The EUR/USD pair is moving towards the USD 1.09. However, the euro lost some ground against the Swiss franc at CHF 1.055 and against the pound at GBP 0.876. Investors are also turning away from the yen. As a result, the USD/JPY pair has been quiet and has remained virtually unchanged at JPY 109.

Economic data Few statistics were on the agenda in the Euro-Zone this week. In Germany, Industrial Orders dropped less than expected (-1.4% vs. -2.7% expected) and the Trade Balance also exceeded expectations at 21.6B. In France, GDP fell by 6% in the first quarter according to the Bank of France, which was plagued by the Covid-19 epidemic. Next week will still be a light week, with Euro-Zone Industrial Production and the CPI index. In the United States, oil inventories jumped to 15.2M, with weekly jobless claims at 6606K against 5000k expected (6867K last week). The PPI index fell 0.2% and the Michigan index to 71. Traders will see next Tuesday and Wednesday's Retail Sales, Empire State Manufacturing Index, Industrial Production, Phillyfed Index and housing data, as well as the Fed's Beige Book. Comparison between the number of contaminated people in Europe and the USA

Markets choose optimism Is the glass half empty or half full? Investors' indecision is reflected in the course of the stock market indices this week, sometimes rising, sometimes falling, with significant downside risks. However, it must be said that in this up and down movement, advances are being made as prices of the world's major markets remain higher than last week's levels. It is obviously much too early to claim victory, since there are still many unknowns. In the very near future, investors will remain extremely attentive to the dynamics of the contamination curves around the world, Europe's ability to formulate a common response on its own scale, and also the proposals made by OPEC+ to get out of the oil crisis. Let us hope that the Easter weekend can provide some answers.