13 April 2020

S&P500 Recorded Best Weekly Gain in 45 Years

Tags

What’s happening: US stocks gained on Thursday, finishing the holiday-shortened week sharply higher.

What happened: US major indices surged last week and recovered almost half the losses suffered in late March over fears of the coronavirus impact on the economy.

Investor sentiment turned positive as the coronavirus cases curve flattening in some of the hardest-hit areas in the US and in other parts of the world, resulting in the best weekly gain since 1974 for one of the major indices.

Why it matters: The S&P 500 index roared back to life last week, to mark its best week since 1974 despite just four days of trading. Signs of a slowdown in the spread of the deadly virus was the biggest driver of last week gains. The number of daily infections in the US and other parts of the world slowed last week, with New York, the hardest-hit state in the US, posting a decline in its hospitalisation rate.

The US economy has been severely impacted by the coronavirus related shutdowns. The Labor Department reported on Thursday that more than 6.6 million people had filed for jobless benefits in the week ending April 4. Moreover, the preliminary reading of the consumer sentiment index recorded its biggest-ever single-month drop, falling to 71 in April from a previous reading of 89.1.

In a bid to kickstart the economy, the Federal Reserve disclosed another $2.3 trillion stimulus program on Thursday to support small and medium-sized businesses in the US, by providing enough liquidity in markets.

The Dow jumped 1.2% to close at 23,719 on Thursday. The S&P 500 climbed 1.5%, while the Nasdaq 100 index gained 0.8% in the previous session. For the week, the S&P 500 index spiked 12.1%, recording its strongest weekly gain since 1974. The Dow rose 12.67% in the week, while the Nasdaq 100 gained 10.59%.

Walt Disney’s shares jumped over 11% last week as the company disclosed that its Disney+ streaming service had crossed 50 million paid subscribers.

Investors were also focusing on a meeting of the major oil producers to control the declining oil prices and ending the price war between Russia and Saudi Arabia. A deal was announced by the OPEC+ group, but investors still fear the agreement will not be able to address the slump in demand caused by the coronavirus outbreak. Crude oil prices finished sharply lower on Thursday, with the WTI oil for May delivery dipping 9.3% at $22.76 a barrel.

What to watch: Investors will be waiting for the start of a brutal first-quarter earnings season. Earnings from big banks, including JPMorgan Chase, Wells Fargo, Citigroup and Bank of America, will be among the top earnings to watch this week. Wall Street analysts project the S&P 500 earnings to decline by 7.3% in the quarter. US stocks are expected to give up some of the gains posted last week, with stock futures pointing towards a lower open. No major economic releases are scheduled for release today.

The Markets Today

     

The Japanese yen will be in focus today, with the US dollar settling lower against the Japanese currency on Friday.

Context: The Japanese yen traded higher versus the greenback in thin holiday trading on Friday, with most stock markets closed for the Good Friday holiday. The week was mostly bearish for the US dollar as the announcement of another stimulus by the US Federal Reserve exerting pressure on the currency.

Details: On Thursday, the Federal Reserve disclosed a $2.3 trillion new lending plan for small- and medium-sized companies. The Fed has announced various programs since the beginning of March, which has resulted in an oversupply of the US dollar, weighing on the currency against its major rivals. The Fed had also raised US dollar liquidity in March to avoid scarcity in the money markets.

Last week, Japan also disclosed a ¥108.2 trillion ($992 billion) stimulus program to protect the economy from the coronavirus outbreak, as the Prime Minister declared a state of emergency.

Coronavirus cases in Japan have exceeded 7,400 with around 149 deaths. Adding 712 infections from the Diamond Princess cruise increases the total to more than 8,100 for the country.

The USD/JPY pair settled lower by 0.08% at 108.411 on Friday. The pair continued its decline in Asian session this morning, declining 0.34% to 108.09.

What to watch: Demand for the US dollar is expected to weaken in the near term, as global COVID-19 cases continue to decline in major hotspots. The Fed is also expected to announce further stimulus measures, infusing more dollars in the near term. The oversupply in US dollars will affect its price against the major rivals and benefit the Japanese yen.

Support & Resistances
for Today

     

market snapshot

     

Futures at 0400 (GMT)

News shaping
the markets today

     

What else to watch today

     

Turkey’s current account, industrial production and retail sales, India’s inflation rate and China’s foreign direct investment.

 

ADS Securities London Limited “ADSS” is an execution-only service provider. This material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or investment objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by ADSS that any particular investment, security, transaction or investment strategy is suitable for any specific person. To the extent that any content in this material is construed as investment research, you must note and accept that the content was not prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.  This material may contain links to third party websites, and any content, or use of your personal data by any third party websites is not the responsibility of ADSS or any member of the ADSS Group.