(11 MAY 2020)DAILY MARKET BRIEF 1:Equities up on business reopening prospects

Friday’s jobs data in the US was catastrophic with more than 20 million jobs lost during April, but in line with market expectations, so the market mood wasn’t shaken by the ugly number. The US equities closed last week on a positive note. The Dow rallied 1.91%, as S&P500 (+1.69%) and Nasdaq (+1.58%) recorded decent gains.

Asian stock markets kicked ff the week on a cautious positive note, as well, on increased prospects of business reopening and economy gaining back some pace.

Boris Johnson announced the relaxation of some measures in the UK and the government will provide more details on Monday regarding how to make their working environment secure. Johnson wants construction and manufacturing to gradually get back to work, while shops will stay closed until June 1st. So, the UK’s service-heavy economy will remain under a certain pressure for a couple of more weeks. But again, the worst recession in centuries is already priced in the market and won’t cause additional collateral damage.

The main risk to business reopening is a pickup in new cases. Hence, investors will be carefully watching if the contagion curve remains on a descending path. An uptick will likely cause a second wave of halt in activities and hammer the market sentiment. For now, hope dominates.

Nikkei (+1.46%) and the ASX 200 (+1.55%) advanced on Monday, as Shanghai’s Composite (+0.13%) and Hang Seng (+1.97%) gained after the People’s Bank of China (PBoC) announced over the weekend ‘more powerful policies’ to fight unprecedented economic challenges follow the Covid-led slaughter in the economy. US and Chinese officials will restart negotiations. According to the latest news, both sides made a joint statement that there has been a good progress regarding the phase-one agreement. China probably didn’t have the opportunity to boost the US farm product purchases as it was fighting for its own life, but Chinese officials will certainly do whatever they can to stay in good terms with the US. With heavy recession knocking on everybody’s door, both economies have great interest in bettering their trade relationship. Of course, Trump risks prevail, but investors remain optimist that the US and Chinese leaders won’t further hammer an already butchered global economy.

Activity in FTSE (+0.84%) and DAX (+0.83%) futures hint at a positive start on Monday. The FTSE 100 is preparing to have a grip on the 6000 mark.

By Ipek Ozkardeskaya