Markets brace for the week ahead as the Coronavirus continues to disrupt the world order. As the death toll has topped 300,000 worldwide, markets have shown a tentative appetite towards risk-on assets. Oil is up 7.45% the past week, with the S&P 500 down 1.58%. Gold is up 2.3%.
As Japanese residence defying lockdown rules, analysts predict a 4.6% contraction in annualized GDP growth. The government issued a $1.1 trillion fiscal stimulus package in early April, which including lowered interest rates and asset purchases. This stimulus package represents 21% of their GDP. in With an aging population and a slowing pre-coronavirus GDP growth rate, investors and traders will be looking for any positive sentiment in the report today to bolster the JPY as a safe-haven currency.
A key event to watch for traders and investors, as sentiment from the FED chairman Jerome Powell this week may affect the dollar significantly. However, he has been quite vocal in the strength in the American economy. "In the long run and even in the medium run, you wouldn't want to bet against the American economy. The American economy will recover". However, he also voiced his doubts concerns, stating that "for the economy to recover.. that may have to await the arrival of a vaccine." This is on the back of President Donald Trump stating that the Fed chair was his "Most Improved player." The Fed has implemented deep cuts to the Fed funding rate, and a unlimited quantitative easing scheme extending to bond ETFs.
The United Kingdom has one of the highest Coronavrius fatality rates in the world, currently sitting at aorund 14.3%. The government has pledged a fiscal package totaling $520 Billion, $50 Billion of which going towards employment relief. Analysts predict a 65,000 decrease in the number of people employed. This comes a day before the United Kingdom releases its Core Inflation Rate. With people being locked in their own homes, analysts predict a drop in the rate of inflation this week to 0.8%, down from 1.5% a month before.
With one of the countries not implementing a strict lockdown, Canada has done relatively well. Alongside the government's quick actions and Canadian residence adhering to a self-imposed lockdown, currently their fatality rate stands at 7.5%. Similarly to the UK, analysts predict a slight drop in the rate of inflation to -.1%, down from 0.9% a month before.