(30 April 2020)DAILY MARKET BRIEF 1:Sentiment boosted by Gilead and Q1 tech results.
US and global equities are boosted by positive news from Gilead’s remdesivir trials to treat Covid-19 and solid results from Microsoft and
Facebook as expected. In fact, stay-home environment benefited to Microsoft’s Team, where the daily active users rose by 75 million. Not
quite bad, when we take into account that the latest US surveys hint that many employers consider offering permanent remote-working jobs in
the close future, and the coronavirus experience will certainly lead to a new way of doing business. Bingo.
Facebook on the other hand
revealed strong results, but voiced concerns about weakening advertisement revenues, as consumer cyclical businesses, led by travel and
leisure, cut back on their marketing spending in March.
The Dow and S&P500 closed 2.21% and 2.66% higher respectively, as Nasdaq
led gains with 3.57% advance on Wednesday.
The rally continued in Asia. The ASX 200 gained 2.65%, Nikkei jumped 2.84%, as Shanghai’s
Composite (+1.30%) and CSI 300 (+1.22%) followed with softer advance as the Chinese manufacturing unexpectedly slipped to 49.5 in April,
pointing at a surprise contraction in activity as exports shrank sharply, employment remained weak and deflationary pressures were
strong amid the coronavirus spread to the rest of the world.
Speaking of dwindling world economy, the US economy shrank 4.8% in the first
quarter. This was the first economic contraction since 2014 and the steepest slide since 2008. As such, the US record expansion ran into a
brick wall. The number wasn’t a shocker of course, as most businesses stopped their operations to combat the coronavirus contagion and
spending tumbled, yet the outlook became clearer: the second quarter slide will likely be a large double-digit drop that could go up to 30% as
suggested by leading bank forecasts.
Due today, the European GDP is expected to be more severely impacted than the US figure in the
first quarter, given that the coronavirus outbreak and the following economic shutdowns wreaked havoc in the European economies a couple
of weeks before things started getting bad in the US.
By Ipek Ozkardeskaya
