Market euphoria cooled last week as global indexes marched cautiously lower after appearing to find a bottom. The Dow Jones and S&P 500 wrapped up the past 5 trading days -2.70% and -2.08% respectively. The VIX “fear gauge” fell 28.59% last week, the most since February 2018. Yet sentiment-linked crude oil prices surged over 31% in the best 5 days since at least 1983.
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Oil’s aggressive surge, alongside the Canadian Dollar, occurred amid expectations that the Saudi-Russia price war could come to an end as output might be reduced. Next week there will be an OPEC+ meeting with the goal to help stabilize energy prices. Though initially there appeared to be some confusion over the size of cuts as Saudi Arabia hoped developed countries could join in.
The US Dollar outperformed its G10 counterparts as aggressive US fiscal stimulus was priced in. The markets will continue assessing data from the world’s largest economy as it holds the most confirmed coronavirus cases at the time of writing. About 10 million citizens applied for jobless claims over the past 2 weeks as the country lost 701k jobs in March. That was the most since 2009.
Across the Atlantic Ocean, IHS data showed that the Euro-Area economy is at risk to contracting about 10% annually. Unsurprisingly the Euro treaded lower. Meanwhile gauges of business activity showed the Chinese economy recovering from dismal drops in February. The onslaught of data continues with a recovery in excess market volatility playing out. Can this hold?
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