Financial Markets – Top 5 Things To Watch This Week

While dozens of earnings reports are expected in the coming week and economic data will bring more insights into the impact of the coronavirus the main focus will still be on developments relating to the virus and how soon the economy can reopen.

Around 20% of S&P 500 companies are expected to report results in the coming week and there are also some important economic reports, including U.S. jobless claims, durable goods and existing home sales. The euro zone is to release PMI data for April along with reports from Germany’s ZEW and Ifo, while the U.K. is set to publish figures on unemployment, inflation and retail sales. Here’s what you need to know to start your week.

Some states to begin lifting coronavirus restrictions
U.S. President Donald Trump said on Saturday that Texas and Vermont will allow certain businesses to reopen on Monday while still observing coronavirus-related precautions.

Demonstrations to demand an end to stay-at-home measures spread to Texas on Saturday. Trump appeared to encourage protesters with a series of Twitter posts on Friday calling for them to “LIBERATE” Michigan, Minnesota and Virginia, all run by Democratic governors.

Trump has touted a thriving economy as the best case for his re-election in November.

Several states, including Ohio, Michigan, Texas and Florida, have said they aim to reopen parts of their economies, perhaps by May 1 or even sooner, but appeared to be staying cautious.

Vice President Mike Pence said on Friday the U.S. had the capacity to do a sufficient amount of testing for states to move into a phase one of reopening, but Governors and state health officials say there is nowhere near enough test kits and equipment available.

The U.S. has by far the world’s largest number of confirmed coronavirus cases, with more than 720,000 infections and over 37,000 deaths.

Earnings deluge
Around one hundred S&P 500 companies are expected to report results this week, as investors digest a market surge that has lifted the S&P index 25% from its March lows as of Thursday. Those include major industrial, tech and consumer products companies, as well as streaming company Netflix (NASDAQ:NFLX), whose shares rose to a record high in the past week as widespread stay-at-home orders drove demand for online streaming services.

Some of the companies also reporting are among those worst hit by the pandemic’s fallout, including airlines such as Delta Air Lines (NYSE:DAL) and Southwest Airlines (NYSE:LUV).

Investors are bracing for brutal first-quarter earnings but will also be on the lookout for indications of how soon business can get back on track.

U.S. initial jobless claims may ease
Initial jobless claims could slow again this week as the initial reaction to shutdowns starts to ease. More than 22 million Americans have filed for unemployment benefits in the past month as closures of businesses and schools and severe travel restrictions have hammered the economy.

Durable goods orders are expected to plunge, given recent weakness in manufacturing data and the collapse in the oil and gas sector caused by tumbling commodity prices.

The calendar also features updates on new and existing home sales and PMI data, which is expected to drop further.

Meanwhile, the Federal Reserve is in blackout mode ahead of its next scheduled policy meeting on April 29th.

Euro zone PMI pain
Thursday’s advance readings of euro zone PMIs for April are likely to make for painful reading.

Composite euro zone PMIs, comprising services and manufacturing, dropped to a record low of 29.7 last month, the biggest monthly drop since the survey began in July 1998.

In addition to the PMI data reports from Germany’s ZEW and Ifo Institutes will shed more light on the health of the bloc’s largest economy as it prepares to ease virus lockdown measures.

Euro zone finance ministers are to meet on Thursday to continue discussions about an EU fund to boost the recovery. The issue of joint European debt, or corona bonds, is likely to come up again, but the chance they will ever see the light of day remains slim.

UK data to give first real look at economic hit
The scale of the economic fallout from coronavirus pandemic in the UK is likely to be both larger, and much more rapid, than that of the Global Financial Crisis.

With that in mind, some economists expect Thursday’s retail sales figures to show a decline of around 10%, but this number could be much larger based on other spending indicators already released. PMI data is also expected to point to a steep slowdown in activity.

The week will also bring what will be closely watched updates on unemployment and inflation.





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