This week saw some optimism in global stock markets as COViD19 cases started to show signs of slowing down across a number of Western countries. However, it can be easy to overlook the fact that future earnings across many companies in the world are going to show large drops. Expect these earning drops to start showing up on analysts radars shortly. This is likely to start weighing on global stock markets again in the coming weeks once enthusiasm for the slowdown of COVID19 fades.
Key events from the past week
- USD: Safe Haven Dollar Moves, Wednesday, April 08. In the present COVID19 crisis the USD acts as a safe haven currency alongside the JPY and the CHF. Weakness in equity markets result in USD strength. Expect this dynamic to play out again next week with any stock weakness to result in USD buyers.
- US oil: OPEC+ Talk Cuts, Thursday, April 09. OPEC+ met this week but have still not reached a final agreement on oil production cuts at time of writing. Moving forward expect strength in oil to find sellers as global demand falls heavily.
- EU finance ministers: No-Deal struck, Friday, April 03. A major market focus this week was whether the EU members would agree to the use of corona bonds. As with the OPEC+ meeting no agreement was reached by late Thursday.
Key events for the coming week
- USD: Look out for dollar strength, All week. If we get a return to selling in stocks and equities expect the USD to be bought again. The USD has been acting as a safe haven currency, so a risk off market will prompt USD strength.
- CAD: Rate Statement, Weds, April 15. The Canadian Dollar will be in focus next week after the fall out from the OPEC+ meeting this week. Canada’s oil dependent economy rises and falls with oil prices.
- Coronavirus: Watch out for the latest virus news. This week the hope was that we are starting to see a slowdown in the spread of COVID19. If we see a pickup in cases this week watch out for strength in CHF, JPY and the USD to re-turn with renewed strength.