S&P 500, DAX 30, FTSE 100 Analysis and News
- S&P 500[1] | Are we following 2008?
- DAX[2] | ECB Takes Center Stage After EU Summit Failure
- FTSE 100[3] | Brexit Risk Premium Cannot Be Forgotten
Source: DailyFX
Economies are now beginning to look at re-opening, however, the question remains as to what a post-lockdown world will look like. This is particularly tricky given the risk of a second wave of COVID-19 infections. Over the coming week, economic data will provide further evidence as to just how severe the impact of COVID-19 and subsequent lockdown measures have been across the globe. Focus on US and Eurozone GDP figures, alongside the ISM Manufacturing Survey. In light of recent sentiment surveys[4] (Markit PMI), it is widely expected that economic growth will show a sizeable contraction. On a stock-specific front, Apple is due to announce its earnings on April 30th.
S&P 500 | Are we following 2008?
The past week has seen modest losses for the S&P 500 (2.7% at the time of writing) as hopes of a potential vaccine for COVID-19 in the short-term had been dampened after Gilead’s drug failed at its first trial. That said, while equity bulls may take comfort from the pullback in volatility, as we have noted previously,[5] the peak in the VIX does not necessarily mean the bottom for the equity market. As such, given that the macro-backdrop remains weak (data to confirm as much), this begs the question as to whether we are following the 2008 pattern.
Month-end rebalancing may also play its part in curbing further upside in equities as investors look to rebalance their portfolios. Of note, US equities have gained 7-8% since the beginning of April.
