(24 April 2020)DAILY MARKET BRIEF 2:Do we have almost forgotten the US-China trade war

On the earnings side, American Airlines earnings are due today before the opening bell and the latest EPS estimate points at -2.26, like Delta Airlines which has posted its first loss in 9 years earlier this week. Now it is not said that the headline figures will shoot the stock price down. The ultra-low oil prices should decrease operating costs and redress the airline companies’ results in the coming quarters, but it will also depend on how fast the activity will pick up. American Airlines shares dropped from 30 to 9 since February, a quite dramatic fall. We see opportunity in buying the dip in airline stocks where the downside potential is probably, almost-fully exploited, as the coronavirus-led sell-off has certainly hit a bottom near these levels. Government help to save the airline companies should also help bettering the investor mood.

One last word for this week. With the coronavirus pandemic sitting almost alone in the global headlines since the beginning of the year, we have almost forgotten the US-China trade war. Though the last season of US-China trade saga ended on hope amid the signature of the phase-one trade deal, the future of negotiations and the signature of a more comprehensive deal between the two countries seem increasingly under threat. As the ‘Chinese virus’, as Trump calls it, has landed full force in America and paralyzed life and businesses, the blame game has already started deteriorating the relationship between Washington and Beijing.

By Ipek Ozkardeskaya