Here is what you need to know on Friday, May 1:
The market mood has worsened amid fears of further US-Sino decoupling and fears about companies’ earnings. Stocks are down the dollar is on the rise, especially against commodity currencies, which are paring gains from earlier this week. GBP/USD and especially EUR/USD are holding onto their gains.
Apple refrained from issuing guidance amid growing uncertainty and Amazon reported growing revenue but also higher expenses in order to protect workers and customers. Both giants’ pronouncements have been weighing on sentiment. Broader stock markets ended April with substantial gains.
See S&P 500: Five charts to explain the comeback and why coronavirus carnage may crash it again
US President Donald Trump suggested that a lab in Wuhan is the origin of coronavirus and that China failed to contain it. America’s intelligence services are still investigating the origin of the disease but ruled out that it was manmade. The White House is considering how to punish China but denied that the US is considering canceling debt obligations.
The Federal Reserve expanded its Main Street lending program in yet another easing move outside its regular monetary policy decisions. The move comes after weekly jobless claims dropped for the fourth consecutive week yet stood above three million. A total of some 30 million Americans lost their jobs since mid-March.
The European Central Bank left its Quantitative Easing programs unchanged yet eased lending conditions to banks. Markets were initially disappointed, with the spread between Italian and German bonds widening, yet that risk premium remains under control.
Christine Lagarde, President of the ECB, warned of a severe downturn just after Gross Domestic Product figures showed the eurozone economy shrank by 3.8% in the first quarter.
Europe is slowly returning to business with many leaders fear the second wave of infections. Cases and deaths have been falling, especially in Italy and Spain, the hardest-hit countries. Germany is also moving forward, yet Chancellor Angela Merkel erred on the side of caution and rejected a faster easing pace.
UK Prime Minister Boris Johnson declared that the peak of the coronavirus outbreak passed and promised to lay out a plan to exit the lockdown next week. GBP/USD is trading below 1.26 after jumping above that level late on Thursday.
On the medical front, Gilead plans to ramp up production of Remdesivir, which has proved successful in helping COVID-19 patients. Microsoft founder and philanthropist Bill Gates expressed hope to see a vaccine within nine months.
Petrol prices stand out with ongoing recovery. WTI is trading closer to $20 as oil majors are announcing their results.
Watching: US data, the market mood
The US ISM Manufacturing Purchasing Managers’ Index is set to drop sharply in April after holding up near the 50-point threshold in March. The forward-looking survey serves as the first hint toward next week’s critical Non-Farm Payrolls report.
See US ISM Manufacturing PMI April Preview: Free fall, is there a parachute?
Speculation about easing lockdowns in the UK, European countries and also in the US remains high on the agenda. Several stay-at-home orders have expired in America. Coronavirus statistics remain important, yet the focus has shifted to reopening.
Canada will unveil the name of the person that will succeed Bank of Canada Governor Stephen Poloz. His deputy Carolyn Wilkins is the leading candidate.
Friday is a holiday in many European countries, meaning trading volumes will likely be lower than usual.
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