Gerald Fitzgerald’s Market Review April 14th

LAST WEEK IN 30 SECONDS...

Despite the ongoing uncertainty and a condensed trading week, equities found significant support with global equities up 9.4% for the period. Driven in large part by assertions that the spread of the virus was in containment mode within the Eurozone, coupled with the continuing statements of support by central bank and government bodies, investors turned to risk-on mode.

Oil prices fluctuated last week as OPEC and others including Russia agreed to cut oil production by 10m barrels a day. Investors remained underwhelmed, however, with the view that such a cut would not be sufficient to offset the drop in demand given the ongoing business interruptions.

THIS WEEK IN 30 SECONDS...

The coronavirus continues to drive short-term uncertainty with officials closely looking for signs of a plateau in the contraction rate of the virus within the US. With countries including China and Singapore announcing a resurgence in cases, markets remain heavily influenced by announcements of a vaccine breakthrough.

The week is another short trading week with investors looking to the escalation in corporate earnings announcements as a closer guide to the actual health of the global economy. Over 900 companies including Johnson & Johnson, JPMorgan Chase and Bank of America provide an update on earnings and their outlook for the remainder of the year.

US FEDERAL RESERVE HAS JUNK IN THE TRUNK

The US Federal Reserve took the extraordinary step last week in committing to purchase sub-investment grade or high yield bonds. The Fed took the step as part of a wider $2.3tn support package to purchase these bonds via an ETF to support those companies’ whose borrowing costs are higher due to their lower credit ratings. The yield or return demanded by investors fell to 8.4% on the back of the news.