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Market digest - 30 April 2020

This Market Digest provides an overview of economic activity and a round-up of financial market news for the past fortnight, as well as the key things to watch out for over the coming weeks.
May 2020

This Market Digest provides an overview of economic activity and a round-up of financial market news for the past fortnight, as well as the key things to watch out for over the coming weeks.

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Risk Disclaimer 

Views and opinions expressed by individual authors do not necessarily represent those of BMO Global Asset Management. The value of investments and any income derived from them can go down as well as up and investors may not get back the original amount invested. The information, opinions, estimates or forecasts contained in this document were obtained from sources reasonably believed to be reliable and are subject to change at any time.

Economic news at a glance

Icon chevron-rightUS Q1 GDP came in at -4.8% quarter-on-quarter annualised, worse than expected

Icon chevron-rightEarnings season headlines weigh on global equities but less on credit; Q1 EPS growth -16% year-on-year in US, -30% in Europe

Icon chevron-rightAdditional fiscal support pledged: $484bn in US, €540bn in EU; ECB eases TLTRO III rules, PEPP term

Financial markets at a glance

Icon chevron-rightWithin equity markets, Value modestly outperformed, along with Cyclicals on increased positive recovery sentiment

Icon chevron-rightEuropean investment grade is expensive versus US equivalent; EM debt is suffering with lower commodity demand

Icon chevron-rightLower rates are likely for longer in the UK and Japan as recovery expectations fade; volatility in rates has decreased across the board due to central bank support

Things to watch

Icon chevron-rightEarnings look set to be weak through Q2, which could limit any stock market recovery and see a short-term retracing in equity markets of 10 to 15%

Icon chevron-rightOngoing central bank support outside of the US is unclear – especially the ECB due to the German high court ruling

Icon chevron-rightMarkets appear to be looking through the risks of second-wave Covid-19 outbreaks, but new cases and deaths are proving stubborn in some US states and emerging
          markets

Risk Disclaimer

Views and opinions expressed by individual authors do not necessarily represent those of BMO Global Asset Management. The value of investments and any income derived from them can go down as well as up and investors may not get back the original amount invested. The information, opinions, estimates or forecasts contained in this document were obtained from sources reasonably believed to be reliable and are subject to change at any time.

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