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Contents
Click on the links below to get to the stuff you really really want.
USA – Gilead’s potential treatment makes progress; US economy slumps; Investors focus on hopes; Oil prices up; No new stimulus from Fed
UK – Travel, leisure and energy stocks among biggest gainers; Bond demand and prices still nudging upwards though
Continental Europe – German manufacturers led gains; Italy downgraded by Fitch; Spain’s retail sales slumped
Elsewhere – Stocks up; Rumours of Chinese infrastructure stimulus
WTF – Where are they now?
Links
Numbers
Ts & Cs
USA
There’s hope and there’s data. Yesterday, hope was the big winner.
The US economy has shrunk by the most in 12 years and, it turns out, it was performing worse than had been expected even before the virus struck.
But who cares when Gilead Sciences comes up with a potential treatment for Covid-19 that has delivered some positive results? Remdesivir has reached its “primary endpoint”, an early stage of approved development, and that’s without including any bleach.
Investors jumped on this sending the S&P 500 up by 2.7%, oil prices up and the ViX (a measure of nervousness among investors) down. Oil prices are now back in the $20s (who would have thought we’d be saying that after a rise in price?). Tech companies had a particularly good day. As well as the rumour-mill on virus treatments working overtime, Google posted better-than-expected numbers for the first quarter of the year. So up went the tech-heavy Nasdaq Composite by a solid 3.6% on the day.
One downer came in the form of no new stimulus from the Fed (the US equivalent of the Bank of England). Investors had been hoping for more quantitative easing (electronically printing cash) from them. But the folk at the Fed are a solid bunch and not to be rushed no matter how blonde the individual rushing them. With more bad data to come and no one really knowing how long this whole shebang is going to drag on for, the Fed kept what little powder is has left, dry.
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UK
Everyone is more or less following the same developments at the moment. The UK is no exception, which is why the FTSE 100 and FTSE 250 closed 2.6% and 3.3% higher on the day. A vaccine is being seen as a silver bullet against the virus and need for a lockdown. But finding the virus, difficult enough in itself, would then be followed by producing enough of it, getting it out to everyone (that’s more than 7 billion people) and seeing what side effects develop. That’s going to take a fair amount of time, so the successful vaccine is the starting whistle, not the finishing line.
In the meantime though, travel, leisure and energy stocks all did very well as you’d expect. But those bond investors are sticking to their guns. The demand for and price of benchmark 10-year Gilts (UK government bonds) continued the trend that they’ve had throughout April of gently rising. There’s still more bad economic news to come, and we might see second spikes of contagion in countries that open up.
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Continental Europe
Continental stocks were following suit with everyone else yesterday. The Euro Stoxx 50 and German DAX closed 2.2% and 2.9% higher respectively yesterday. German manufacturers that export led gains with the likes of MTU, Continental, Daimler, BMW and VW all posting gains of 5.8% or more.
It was a less positive day overall for Italy. The country’s credit rating was downgraded by rating agency Fitch by one notch to BBB-. It’s now just one level above sub-investment or “junk” with Fitch. At the current rating, Italy’s borrowing is unlikely to get much more expensive because the European Central Bank is pouring money into the system and bending rules that would otherwise make life difficult for the likes of Italy, Spain and Portugal. Were Italy’s rating to fall one more notch, though, its borrowing costs would be likely to rise, and that would be very bad news for a broken government in a debt-ridden country that’s culturally and historically split between north and south.
Spain also had its bit of bad news. Retail sales there slumped by 14.1% in March. Any other year and it would be a headline story. Today, I doubt that anyone will mention it.
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Elsewhere
Stocks across the Asia Pacific region have largely been on the up this morning. Rises vary from Hong Kong’s 0.3% rise (remember the democracy demonstrations there?) to 3.3% in India. They’re following the US trend, but also got an extra boost from rumours that Chinese authorities were preparing a $565 billion infrastructure investment package.
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WTF (What’s The Fact?)
Where are they now?
For some reason I started wondering what previous politicians are up to during the lockdown. Here’s my guess:
Theresa May – teaching dance lessons online
Jeremy Corbyn – still sitting in parliament wondering where everyone is, but claiming that he can’t get a seat because it’s “ram packed”
Tony Blair – delivering an online webinar about “you know, the people’s virus”
David Cameron – producing a children’s story in which he re-writes the history of James and the Moderately Large Peach
Geoffrey Osborne – selling a new line of sexy hardhats to protect against particularly robust viruses
Nigel Farrage – blaming the Italians for coming up with the word Corona, thus making coronavirus possible
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Links
Investopedia – Loads of free explanations of financial terms including some helpful videos. Not 100% accurate, but a good starting point
Guffipedia – Lucy Kellaway of the FT has collected some painful examples of corporate people disappearing up their own analogies
Guardian – Free to access website with a couple of decent columnists (e.g. Nils Pratley and Larry Elliott)
Times of India – Why use five words when 37 will do?
Daily Mail – Click it. I dare you.
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IMPORTANT
This is my opinion. Yes I read a lot and share what I’ve read with you, but this content remains my
opinion. It’s NOT advice. If you take my advice – don’t take my advice. Any decisions you make about investments, your hairstyle or whether or not to eat marzipan are entirely at your own behest. If you are too stupid to recognise the devil’s ear wax when you see it, then you’re on your own.
