US stock market awaits labor market data and corporate reporting | IFCM

US stock market awaits labor market data and corporate reporting - 1.4.2020

1/4/2020

US stock market down

On Tuesday, US stock quotes fell. The S&P 500 index rebounded by 21% from its minimum on March 23. This movement was part of a technical correction to the 2nd Fibonacci level after a drop of 35% from the February highs. Some fundamental reasons are needed for a further growth. Investors are not yet willing to take risks and, most likely, will wait for corporate reporting for the 1st quarter of 2020, which will be published in the United States starting next week. This week important data on the US labor market and the employment rate (Non-farm Payrolls) for March will be released on Friday. It is expected to be the worst since June 2010 (-100 thousand jobs). The S&P 500 (-1,6%), Nasdaq (-0,95%) and Dow Jones Industrial Average (1,84%) fell yesterday. Now their futures are traded with a noticeable decrease (-3%). For the 1st quarter of 2020, the S&P 500 index fell by almost 20%, which was the most significant quarterly decline since 1987. The main reason for this was the Covid-19 pandemic. The top losers yesterday were utility companies and the real estate sector. Shares of energy companies have grown thanks to a statement by US President Donald Trump about negotiations with Russia and Saudi Arabia regarding the oil production regulation. On Tuesday, the turnover of US exchanges was 13.1 billion shares. This is less than the 20-day average of 15.7 billion shares. Today the business activity indexc for March (ISM Manufacturing) and Construction Spending for February will be released in the US. The ICE US dollar index rose today, no positive news was there for it. So far, this looks like a technical correction after the powerful collapse caused by the Fed statement last week about allocating $ 2 trillion to help the US economy.

European stock indices continue to decline today

European stocks fell yesterday. German labor market data for March turned out to be worse than the forecasts. Citigroup Bank predicts a 1.6% drop in global GDP in 2020 and a 50% reduction in dividends from European companies. Earlier, the ECB allowed European banks not to pay dividends at all and to direct funds to increase own capital. A similar statement was made by the Bank of England. Today, shares of the British bank HSBC fell by 9%. The pan-European stock index EU STOXX 50 continued to fall. This was facilitated by the decline in the economic indicator of the business activity in the Eurozone industrial sector (IHS Markit's manufacturing) in March to a minimum since 2012. At the same time, manufacturing PMI in Italy fell to an 11-year low. A significant negative factor was the continued growth of patients with coronavirus in Europe. Today EUR / USD quotes are falling for the third day in a row amid weak macroeconomic statistics and an increase in the number of patients with coronovirus in the main European countries.

01/04/2020 Market Overview IFC Markets chart

Nikkei has been declining for the second day in a row along with other world indices

All Asian indices are mostly down today. The Australian S & P / ASX 200 index rose in anticipation of a recovery in oil and other commodity prices. Nikkei fell 4.5% amid weak macroeconomic data. Indicators Nikkei Japan PMI Manufacturing and Tankan Large Manufacturing fell to their lows since 2013. However, it’s worth noting that they were still better than preliminary forecasts. Goldman Sachs Bank lowered its total operating profit forecast for 7 largest automakers by 22% this year. Shares of Toyota Motor fell by almost 3%. Hang Seng lost 2.3% today.

Brent recorded a new low today

Brent futures quotes today were falling below $ 25 per barrel. Thus, market participants have not yet responded to a statement by US President Donald Trump about his negotiations with the leaders of Russia and Saudi Arabia about the need to coordinate oil production amounts and stabilize prices. Data on a significant increase in US oil reserves by 10.5 million barrels per week turned out to be more important to investors. This is much more than the forecast of 4 million. Note that the consensus forecast of analysts for the Brent average price for the entire 2020 is now $ 37.7 per barrel. This is lower than the actual average price since the beginning of the year (for 3 months), which for now is equal to $ 47.2, but noticeably higher than current quotes. The main reason for the decrease in world oil prices is a fall in demand against the background of quarantine due to the Covid-19 pandemic in almost all countries of the world.


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