Gerald Fitzgerald’s Market Review May 18th
18 May 2020
LAST WEEK IN 30 SECONDS...
Markets tracked back last week as simmering political tensions between the US and China offset the move to reopen more developed economies. Coupled with these factors, the week saw the US Federal Reserve indicate that the US economy may take a long time to recover with further assistance potentially being required.
US industrial production fell -11.2% during April, a record low, whilst US retail sales indicated a fall of -16.4% over the same period, again a record low. Meanwhile, economic data releases were similarly record shattering closer to home with Eurozone GDP announced at -3.8% for the first quarter of 2020. Global Equities finished the week down -2.0%
THIS WEEK IN 30 SECONDS...
Corporate earnings announcements have seen an increasing number of companies adopt a new measure of earnings that look to exclude implications from for the Covid-19 outbreak, termed EBITDAC. Whilst the metric looks to soften the stark impact of Covid-19 on earnings announcements, its usage and validity has raised an eyebrow from many investors. The week ahead sees over 7,000 earnings announcements from companies including Allianz and Tencent. Expect more debate on EBITDAC.
The US Federal Reserve release minutes of their latest meeting whilst the ECB announce their interest rate decision on Wednesday. Elsewhere, the opening of businesses in the US and Europe from lockdown will be monitored in tandem with the level of Covid-19 cases with any spikes having the potential to unnerve market sentiment.
AUTO INDUSTRY NEEDS A TOW
Global lockdown has seen new car sales stalling, with building stockpiles leading to many carmakers signalling cuts in future production. Particularly hard hit has been Ford whose share price is down over 47% year to date. An unlikely saving sparkplug for the industry may be social distancing as people shy away from public transport. That said, 202 car sales will need to go back to the future and hit 88mph from the get-go to clear the parking lot.
By Gerald Fitzgerald, Investment Consultant
Gerald Fitzgerald joined Invesco’s Investment Consulting team in 2015 and has 10 years industry experience assisting clients with their investment & actuarial requirements. Gerald is a Qualified Financial Adviser (QFA) and a graduate of both University College Cork and University College Dublin.