Stock Market – Top 5 Things to Watch This Week

The U.S. employment report for April will take center stage this week, laying bare details on the depth of the economic fallout from efforts to contain the spread of the coronavirus pandemic. The figures are expected to be historically unprecedented.

Markets will also be watching the progress of some U.S. states and many European countries as they cautiously take steps to reopen their economies. Trade worries could come back to the fore after U.S. President Donald Trump ratcheted up anti-China rhetoric and oil prices will be watched for signs of sustained strength after record output cuts kicked in on Friday. Meanwhile, the Bank of England is to have a policy meeting on Thursday and publish its latest economic forecasts and financial stability assessment. Here’s what you need to know to start your week.



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Labor market wipeout
The Labor Department releases its nonfarm employment report for April on Friday and the overall pictures is expected to be staggering, with economists forecasting the loss of 21 million jobs for the month. That comes after a decline of 701,000 in March, when an historic 113 straight months of employment growth ended. The unemployment rate is expected to jump to 16%.

More than 30 million Americans have sought unemployment benefits in the past six weeks, or more than 18.4% of the working-age population. Restrictions such as stay-at-home orders and social distancing aimed at mitigating the spread of the virus have crippled business activity.

The data will likely add to the enormous pressure on states to reopen even though the number of coronavirus cases is still climbing in many parts of the country.

Trade woes
U.S. President Donald Trump said on Friday raising tariffs on China is “certainly an option” as he considers ways to punish Beijing for its alleged failure to contain the coronavirus.

“A lot of things are happening with respect to China. We’re not happy, obviously with what happened. This is a bad situation — all over the world, 183 countries. But we’ll be having a lot to say about that. It’s certainly an option. It’s certainly an option,” Trump told reporters.

Whether Trump will risk the collapse of his trade deal with China is unclear, but he will be mindful of the threat the coronavirus death toll and economic damage pose to his chances of re-election in November.



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Gradual reopening
Many European countries are gradually reopening their economies, with Italian factories and building sites to reopen from Monday after Europe’s longest lockdown. German schools, museums and churches, will also reopen following the reopening of small shops, while Britain will lay out its exit strategy in coming days.

Governments are wary of a second wave of infections, but with the European Central Bank predicting the euro area economy to shrink by as much as 15% this quarter, authorities are also keen to get activity going again.

Meanwhile, governors in about half of the United States partially reopened their economies over the weekend, with Georgia and Texas leading the way.

As of Saturday, the number of known infections across the U.S. had climbed to more than 1.1 million, including about 65,000 deaths, according to a Reuters tally.

Bank of England to publish new economic forecasts
The Bank of England is not expected to make any changes to monetary policy at its meeting on Thursday, after it cut rates twice in March to a new low of 0.1% and ramped up its government bond-buying by a record 200 billion pounds.

Instead investors will be focusing on the publication of its new economic forecasts and the interim Financial Stability Report.

The BoE will announce its latest monetary policy decision at 06:00 AM GMT, rather than at the usual release time of 12 PM GMT, in order to accommodate the joint publication of the interim Financial Stability Report, which assesses the impact of the coronavirus pandemic on the finance industry.

BoE Governor Andrew Bailey will hold a press conference after the policy meeting.

Will record output cuts bolster oil?
Oil prices climbed on Friday as OPEC and its allies embarked on record output cuts aimed at reducing a supply glut after the coronavirus crisis decimated global energy demand.

The global oil benchmark, Brent crude, has fallen almost 60% percent in 2020 and hit a 21-year low last month as the pandemic squeezed demand and OPEC and other producers pumped at will before reaching the new supply deal that kicked in on Friday.



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The Organization of Petroleum Exporting Countries, Russia and other producers, known as OPEC+, has agreed to cut output by 9.7 million barrels per day from May 1. Even so, some analysts doubt whether the reduction, the largest ever agreed, will be enough as demand is unlikely to recover rapidly.




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