By Eliman Dambell
The first week of April was indeed one for the books. The US jobs market hit record lows, with the amount of citizens claiming unemployment, at the highest they have been other than possibly the great depression. However the record was not broken by small margins, it was broken by over 6 million. Essentially 6 million more people have filed for unemployment than at any other point in history. The previous high was between 500,000 – 750,000.
This saw markets in the US move considerably as the likes of Gold, and the S&P 500 reacted to the volatility. However as we begin the second week of April, many around the globe believe we are set to reach the peak of the COVID-19 pandemic. So what could we possibly expect this week?
In the US, we have now seen total infections reach 336,851, which is more than the 2nd and 3rd highest infected nations (Italy and Spain) combined. Sadly this high infection rate has also led to the US passing over 10,000 deaths this weekend. However although this news is beyond comprehension from a human perspective, many believe that the peak is on it’s way to being hit, and then the gradual fall in infections and deaths will follow.
As a result of the above, Futures markets in the US rebounded, with the Dow Jones climbing as much as 700 points, or 3.7%. The S&P 500 and NASDAQ also followed this by recording huge gains of as much as 3.8% and 4.1% respectively. Many may be surprised by these gains considering 3 days ago we saw the US unemployment rate climb from 3.5% to 4.4%. This can be attributed to the Non-Farm Payroll being at -700K, where it was forecasted to come in at -100K. However with the potential for lower daily infections, markets are starting to believe we may have seen the worse.
The actions from the FED and the treasury have also contributed to creating market confidence, knowing that, everything that can be done, both in fiscal and monetary terms, is being done. This week will also see the FED minutes for March released. A month where several rate cuts took place. Knowing the FEDs mindset in making those decisions could either bring more panic or instill more confidence.
The other market to play close attention to this week will be the situation in Oil markets. President Trump sent markets to their biggest one day gain of 24% on Friday after announcing that Russia and Saudi were looking at cutting Oil supply by up to 10 million barrels per day. The news was then followed by a scheduled OPEC+ call, which was later cancelled as tensions within the cartel continued.
With prices now at $27 per barrel, the interesting question for this week will be if there will be any further major price moves? The current price level does act as a resistance, so any further discussions with OPEC this week could either see this broken or sustained.