This week saw some positive news from the US pharmaceutical company Gilead regarding their drug Remdesivir. Originally created to fight Ebola it was found to reduce recovery time for patients with COVID-19. This positive news boosted global stock markets midweek. Hopes grew of a so called ‘V’ shaped recovery from news of this treatment, but the Q2 impact of the COVID19 outbreak still remains to be seen. Expect projected earnings of major companies to be an ongoing key focus as investors try to understand what the post COVID19 economic environment will look like.
Key events from the past week
- Covid19: Hopes of a treatment boost stocks, Weds, April 29. Global stocks rose on Wednesday on the news of an effective treatment from the company Gilead Sciences. The hopes are that this treatment will be able to speed up recovery times and alleviate pressure on medical facilities around the world.
- USD: Fed Interest Rate Decision, Weds, April 29. The Fed left interest rates unchanged at 0.00%-0.25% and continued its quantitative easing purchases in amounts needed to support the economy. Governor Powell stated that they are now watching the economy closely before any further policy moves.
- EUR: ECB Interest Rate Decision, Thurs, April 30. The ECB kept rates unchanged on Thursday and kept the size of the Pandemic Emergency Purchase Programme (PEPP) the same at €750 billion. However, the ECB reaffirmed its willingness to increase the size of the PEPP as appropriate.
Key events for the coming week
- AUD: RBA Interest Rate Decision, Tues, May 05. The expectations from the OIS contract prices are 40% chance of no change in interest rates from 0.25%. Australia has some of the lowest COVID19 case rates from around the world, so if this remains the case, it should be supportive for the AUD going forward.
- GBP: BOE Interest Rate Decision, Thurs, May 07. The OIS contract prices have a 59% chance of no interest rate change next week. However, there is a 41% chance of a 10bps rate cut which would weaken the GBP.
- Coronavirus: Watch out for the latest virus news. A number of countries are now easing lockdown restrictions and New Zealand looks to be getting its economy back to full speed which should be a boost for the NZD. However, watch out for a pickup in COVID19 cases and deaths this week to return us to a risk ‘off’ market.