The fight against the economic consequences of the COVID-19 epidemic is still first in the economic events of the week. Further aid packages, subsequent activities of central banks, the situation of employees and employers, the oil market – this may most likely attract the attention of investors at the turn of May and April. There will also be key macroeconomic publications.
In the last full week of April, preliminary PMI indices for the manufacturing and services sectors were published. They indicated that the situation in April deteriorated relative to the situation in March, which may indicate an economic collapse also in the second quarter.
Nevertheless, for now, we will focus on the data for the first three months of 2020. On Wednesday, April 29 at At 14:30, preliminary US GDP estimates for the first quarter will be published. According to market consensus, the US recession is expected to be -4.8 percent as annualized reading. In turn, in relation to the quarter to quarter, the largest economy in the world may shrink by 4.1 percent. This, in turn, would be the worst result since the great financial crisis. The situation may be even more difficult than expected by the market. Retail activities outside grocery stores have disappeared. Given this situation, it could be expected that the economy has shrunk by up to more than 5 percent. It may not be better in the second quarter. Interesting facts for the real estate market will be data on signed house purchase contracts. In March to this index was to fall by 10 percent according to market consensus.
On the same day at 20:00, the Fed's decision on interest rates will be published. The market does not currently seem to expect any change in dollar interest rates. Thus, the federal fund rate range could likely remain in the 0.00-0.25 percent range. A press conference after the FOMC meeting will be held at 20:30.
In turn, on Thursday, April 30 at At 13:45 the European Central Bank's decision on interest rates and the size of the asset purchase program will be published. Earlier, by the ECB's decision, the QE program amounts to EUR 20 billion per month. A press conference will be held after 14:30 after the central bank meeting. Also on Thursday, April 30, Eurozone GDP data for the first quarter will be released. The market consensus assumes a decline of 2.7 percent on an annual basis.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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