Daily Market News: Markets rise on infection peak optimism and stimulus hopes

Adam Vettese, UK Market Analyst at eToro, has provided his daily commentary on traditional and crypto markets for April 9, 2020.

Markets have bounced this morning on the hope that coronavirus infections are beginning to slow and there is expectation of more stimulus to come. President Trump was quoted as saying he wanted to reopen the US economy ‘with a bang’ but only once the death toll had reduced.

European markets have opened strongly with the FTSE and Dax each up over 2%, US futures pointing towards a slightly more reserved open, with the Dow Jones indicating opening up 0.6%.

The latest round of US coronavirus relief has once again become the subject of a partisan showdown. Republicans are attempting to gain quick approval of hundreds of billions in funding to assist small businesses struggling with payroll, while Democrats want a broader bill that includes funding for hospitals and local governments. The interim package is small compared to the $2trn relief bill passed two weeks ago, and is likely a fraction of what is to come, but shows the continued struggles of US lawmakers to set aside political differences in the face of the crisis. All eyes will be on Washington to gauge what is likely to be passed this week. Pressure may mount today following the publication of this week’s initial jobless claims figures; last week’s shocked at 6.6 million. Commentators are expectating the unemployment rate to soar up to 13% in the coming months, past the peak hit during 2009 in the midst of the global financial crisis.

Elsewhere, crude oil prices have had a boost in hopes that Opec+ can agree a 10-15m barrel per day cut in their video conference meeting later today, with Russia reportedly set to agree a 1.6m bpd cut.

Stocks jump after uneventful Fed minutes

All three major US indices jumped on Wednesday, with the Nasdaq Composite now back to a single digit loss year-to-date. The jump came after the release of the March meeting minutes of the Federal Open Market Committee, which sets US interest rates. There were no major surprises in the minutes, which gave details on the reasoning behind the second larger interest rate cut, which took rates to near-zero. Most — but not all — officials on the committee felt that action was necessary to cope with the risk of a sharper drop-off in economic activity. In the S&P 500, which gained 3.4%, the real estate and utilities sectors had a standout day, while consumer staples stocks were the worst performers with a 1.4% gain overall. Of the 30 names in the Dow Jones Industrial Average, UnitedHealth, Goldman Sachs and ExxonMobil were among the six names which gained more than 5%.

In other US news, Bernie Sanders ended his campaign for the Democratic party nomination for president, and Disney announced that it now has more than 50 million paying subscribers using its Netflix rival Disney+ service less than six months after launch. Disney stock popped more than 7% in after-hours trading once the number was released.

  • S&P 500: +3.4% Wednesday, -14.9% YTD
  • Dow Jones Industrial Average: +3.4% Wednesday, -17.9% YTD
  • Nasdaq Composite: +2.6% Wednesday, -9.8% YTD

Tesco announces 58% dividend hike despite pandemic concerns

The FTSE 100 stumbled on Wednesday, posting a 0.5% loss, after European Union finance ministers failed to agree on an economic rescue package, with a divide between Northern and Southern European countries creating a roadblock.

In corporate news, Tesco was on the defensive after announcing it is paying out a larger-than-anticipated full-year dividend. The supermarket giant made the decision despite being forced to scrap profit forecasts due to the coronavirus pandemic, and announcing a substantial increase in operating costs due to hiring additional staff during the crisis. Tesco is also in the spotlight as it has enjoyed a sales surge during the pandemic, and is continuing to pay out dividends despite supermarkets receiving billions in new tax breaks aimed at retailers that are struggling. The firm’s share price closed the day 0.6% down, staging an impressive recovery from its initial dip on the open.

  • FTSE 100: -0.5% Wednesday, -24.7% YTD
  • FTSE 250: +1.9% Wednesday, -27.5% YTD
forex market crypto news and updates

What to watch

US jobless claims: Another week of initial jobless claims data will be released on Thursday, after 10 million new people filed for unemployment in the US over the past two weeks. The consensus expectation, which last time was way below the mark, is for a figure of six million this week. Currently, 43 out of 50 US states — accounting for 95% of the population — are under stay-at-home orders with nonessential businesses shut down. Expectations are high that figures will turn more dire in the weeks to come, but it is worth remembering not all of the jobs being lost are permanent. Workers who have been temporarily let go, such as restaurant staff, are also being captured by the figures and will make up a substantial proportion of the total.

Consumer sentiment index: Thursday will also bring April’s preliminary consumer sentiment index measure from the University of Michigan, which is anticipated to fall from 89.1 last month to 75 now. A figure of 75 would be a six year low. The measure matters because the US economy, particularly in recent years, has been driven by consumer spending. While the massive spike in unemployment is assumed to be impacting the spending of affected households, far less is known about the habits of those stuck at home who remain employed. Those households have seen their outgoing costs slashed, and still have access to a host of online retailers.

Crypto corner

Bitcoin has continued to edge higher throughout the week, encouragingly creating higher highs throughout the week as it consolidates above the $7,000 mark. A breach back below $7,000 could invalidate the existing trend, however, if it can maintain its current momentum it could edge up to the psychologically important $8,000 level where the huge breakdown occurred last month.

Elsewhere, Bitcoin Cash underwent it’s halving event yesterday. Halving means that miners will see the reward they receive for mining each block reduced by 50%. Many miners have seen their margins significantly eroded and only those with the most powerful equipment will be able to stay profitable.

All data, figures & charts are valid as of 9/04/2020. All trading carries risk. Only risk capital you can afford to lose.

This is a marketing communication and should not be taken as investment advice, personal recommendation, or an offer of, or solicitation to buy or sell, any financial instruments. This material has been prepared without having regard to any particular investment objectives or financial situation, and has not been prepared in accordance with the legal and regulatory requirements to promote independent research. Any references to past performance of a financial instrument, index or a packaged investment product are not, and should not be taken as, a reliable indicator of future results. eToro makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared utilizing publicly-available information.

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