Gerald Fitzgerald’s Market Review May 25th

LAST WEEK IN 30 SECONDS...

Markets rallied once again last week as investors remained optimistic for the continued recovery from the global covid-19 pandemic. Elsewhere, Donald Trump pressed further on assertions that China are culpable for global deaths from the virus. This was not enough, however, to dampen market momentum as global equities finished the week up 2.5%.

Within the Eurozone, negotiations continue to align covid-19 financing between states. The “frugal four”, namely Netherlands, Sweden, Austria and Denmark, are not inclined to support Germany’s proposal for which there is no repayment requirement. Getting all 27 member states to support a suitable proposal for all will prove a challenge.

THIS WEEK IN 30 SECONDS...

The week ahead sees geopolitical risk continue to draw attention as Donald Trump further agitates US China relations. Elsewhere, the efforts within the European Union to agree a plan to meeting the cost of the coronavirus and its implications for the union continue. Market sentiment is not expecting imminent agreement to any proposal.

US GDP updates are issued on Thursday, which will unsurprisingly point to a contraction whilst Eurozone inflation updates are released on Friday pointing to inflation continuing to lag European Central Bank targets. US weekly jobless claims are released on Thursday with markets growing increasingly wary of a protracted elevation in these headline numbers.

Elsewhere, quarterly financial releases by corporates have tapered down this week to over 3,000 company updates, including AGMs by Amazon and Facebook.

TRUMP’S TENURE IS ALL ABOUT BIG BUSINESS

With the US presidential election taking place on the 3rd November 2020, Donald Trump is acutely aware of the need to showcase strong market performance over his rein. Whilst the headline S&P500 index is up over 38% since Trump was elected in 2016, the equally weighted version of this index of 500 constituents has delivered a return of just over 17% over the same period.