Weekly Market Outlook
Let us have a quick look at the week ahead, which is not rich in economic data. Tomorrow the UK is reporting the final version of the GDP for the last quarter of 2019. The US and major European economies, Germany, France and the UK, are releasing key manufacturing data on Wednesday. By far the most important figure is the US non-farm payrolls. Watch out carefully for it on Friday and adjust your trading, because it promises to cause violent swings. Last but not least, the COVID-19 developments promise to remain the main driver of financial markets around the globe.
All Week: Coronavirus
Although indices around the globe staged a recovery in the past few days, March has been a really painful month for investors. Last week the Senate passed a massive $2 trillion stimulus package in a bid to reduce the negative impact the coronavirus pandemic had on American businesses and workers. Other major economies similarly introduced massive fiscal measures to soften the economic blow from the fast-spreading disease. In spite of all this, it should be kept in mind that as the pandemic has not yet reached its peak, it would continue posing a heavy burden on financial markets. For this reason, volatility is expected to remain high for some more time.
31.03: UK Final Q4 GDP
The final adjustment of the UK’s Q4 gross domestic product is due to be released on Tuesday. Despite generally being carefully watched by market participants, this time the figure will probably be of least interest. With the last adjustment, the number is likely to come out at 0%, thanks to some recovery in December, which directly resulted from the election outcome. Economic activity in the country is expected to be seriously subdued due to the strong negative influence of the COVID-19 pandemic and the restrictive measures the government has recently imposed to limit its spread.
1.04: Manufacturing PMIs
The February Chinese data clearly demonstrated the brutal impact the one-month lockdown had on the country’s economy. Last week, we saw some really bad numbers in the flash purchasing manager indices for Germany, France, and the UK. The upcoming Wednesday data is probably going to be even worse, as it will incorporate the final week of the month too. Poor European PMIs will not be that surprising anyway since they have not been great in the past few months. Market participants will be more keenly awaiting the US ISM manufacturing reports, which will offer some insight into how badly the rapid spread of the coronavirus has been affecting the American economy.
3.04: US Non-Farm Payrolls
Expected to come out on Friday, this is the single most important release for the week, and we expect it to be disastrous, following last Thursday’s shocking 3.3 million jobless claims. This is why investors should brace for some enormous volatility around the publication time of this crucial piece of data.
Expectations are already seriously revised downwards after the pretty high 273,000 February reading. Analysts now forecast -100,000, which in our view, would be reconsidered downwards in the course of the week. Just for reference, the record low US non-farm payroll number was in March 2009 and came out at -663,000. Make sure you remember this figure and compare it to this month’s report and to the ones to follow. The current situation promises we can easily go into uncharted territory should this reading be surpassed.