US Stocks Rebound but Close the Week in Red
UNITED STATES
Friday saw US stocks rebound from Thursday’s tumble but the recovery was not enough to close the week in the green. The DOW led gains, up 1.90% on the day while the S&P and the NASDAQ rose 1.30% and 1.01% respectively. For the week, the NASDAQ slid a comparatively modest 2.33% while the S&P and the DOW were 4.80% and 5.55% lower respectively. Yield on 10Y USTs closed higher at 0.7034%.
UNITED KINGDOM
Figures for the British economy for April showed a more dismal picture than had generally been expected prompting calls for a greater relaxation of social distancing rules. GDP tanked 20.4% from March figures as construction and manufacturing contracted 40.1% and 20.3% over the same period. Prime Minister Boris Johnson said he would like to relax the rules but would only do so when the number of infections fell without specifying a figure. The pound closed weaker at $1.2540 while yield on 10Y UKTs closed higher at 2.08%.
EUROPEAN UNION
European figures for April on the other hand were slightly better than had been predicted. Industrial production was 17.1% lower for the month having been expected to contract 20% according to a Reuters poll and the figure marks the biggest contraction on record. The euro closed lower at $1.1256 while yield on 10Y DBRs closed lower at -0.439%.
ASIA
Asian markets opened the week lower amid the prevailing risk off sentiment as concerns grow over the resurgence of coronavirus cases. The NIKKEI was down 3.47% while the ASX and the HANG SENG closed 2.18% and 2.16% lower, respectively. The CSI had a smaller slip, closing at -1.02% as industrial production grew 4.4% in May.
TURKEY
Turkey’s current account posted a deficit for a fifth month in April to $5.06 billion with the annual deficit coming in at $3.29 billion compared to March’s $1.3 billion surplus. Reserves also fell $8.61 billion as officials tried to stem the slide in the lira. The lira closed firmer at 6.8140 to the dollar while TURKEY 30s were slightly higher, trading in the mid 90 levels.
LATAM
Brazil inflation slowed to the lowest since 1998 for May coming at 1.88% YoY with investors expecting end-2020 figures at about 1.5%, a full point below the 2.5% floor of the target range. With the real having rallied some 14% (as at Friday’s close at 5.0497 to the dollar) from May ‘s record low, the central bank should have more room to ease at its monetary policy meeting June 46-17. BRAZIL 30s closed about flat, trading in the low 96s.
SSA
Fitch Ratings affirmed the continued risk that oil-dependent African nations – Nigeria, Angola and Gabon in particular – face amid the shock of the coronavirus pandemic. Fitch has already downgraded 7 of the 19 rated African issuers since March and expects GDP to contract 2.1% in 2020 before rebounding in 2021. The ratings agency clarified that participation in debt relief efforts would not be classified as default as it only considers commercial debt in its assessments.