Coronavirus Lockdown Easing Brings Relief Rally, But a Wave of Bad Economic News Will Follow

Coronavirus Lockdown Easing Brings Relief Rally, But a Wave of Bad Economic News Will Follow

Most equities rose again on Wednesday as investors grew increasingly, but cautiously, hopeful that the worst of the coronavirus had passed and as countries begin to slowly open up from lockdown. But the unemployment data will hurt the sentiment at the end of the week.

We are not buyers in here, the Politicians that imposed the lockdowns and regulations have done serious damage to the economy and we will see that in the months to come.

Italy begins easing coronavirus lockdown: Photos - Los Angeles Times

While a string of data highlighted the calamity visited upon the global economy by COVID-19, a slowdown in both infections and deaths in some nations is allowing them to ease restrictions that have kept half the planet stuck at home.

Federal Reserve Vice Chairman Richard Clarida provided an upbeat outlook, saying the US economy could see positive growth in the second half of the year, though tempered that by saying it was dependent on containment of the virus.

Italy eases coronavirus lockdown, U.S. haltingly lifts some ...

“Risk sentiment continues to be buoyed on news of more countries/states rolling back containment measures, followed by reports of more companies re-opening operations,” said Tapas Strickland of National Australia Bank.

“That is giving hope that rollback will allow economic activity to resume and that we may be passed the trough in economic activity.”

Hong Kong rose 0.7 percent, Seoul gained 0.8 percent and Singapore put on 0.9 percent. There were also gains in Taipei, Jakarta and Wellington, though Sydney dropped one percent.

Hundreds of Spaniards exercise outside for first time in seven ...

Shanghai dipped 0.3 percent.

Fears of a second wave of contamination as the lockdown eases was keeping traders on their toes.

“It is absolutely dependent on what happens with respect to infection rates and whether there is the so-called second wave,” Andrew Wilson, at Goldman Sachs Asset Management, told Bloomberg TV.

Despair and pride in China's Wuhan as coronavirus lockdown eases ...

“So as we ease these lockdowns there remains the risk that of course you then have to tighten up the controls. That’s why governments around the world are going to be relatively cautious about how they ease these lockdowns.”

Hong Kong civil servants to return to work as coronavirus lockdown ...

– Jobs set darken the mood-

Observers are also keeping tabs on China-US relations after Donald Trump hit out at Beijing over its handling of the pandemic, sparking fears of a renewal of the economic superpowers’ trade war that hit markets last year.

“Worries that China could retaliate against the US virus and trade accusations are real,” said OANDA’s Jeffrey Halley. “If anything can undermine a peak virus rally, a US-China trade war would do the job nicely.”

Friday sees the much-anticipated release of US jobs data for April, with consensus forecasts that unemployment has surged to an incredible 16.2 percent — the highest since 1948 — from 4.4 percent. However, some economists expect it to rise even higher.

Oil markets were flat, having doubled since last Tuesday fuelled by hopes that demand will begin to pick up as people start going back out and start spending after the long-running lockdown in key economies.

“With economies reopening around the world and the market rebalancing in full swing, traders are positioning for a multi-staged pick-up in demand initially led by gasoline demand at the pump as consumers emerge from lockdowns,” said AxiCorp’s Stephen Innes.

He pointed out that as China emerges from its lockdown, figures showed traffic in the country’s big cities was higher than pre-virus levels, suggesting people were opting for private travel rather than public transport, which would be good for petrol demand.

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S. Jack Heffernan Ph.D. Funds Manager at HEFFX holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

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