Last Week’s Highlights
– US government unleashes $2 trillion package to deal with COVID-19
The Trump administration on Friday signed a $2 trillion relief bill to deal with the economic devastation caused by the pandemic. This is the biggest relief plan in the history of the United States. It comes at a time when the US is surpassing China in terms of the number of people infected by the virus.
– Bank of England leaves interest rates and QE unchanged
BoE Governor Andrew Bailey signaled that the bank was ready to do more if required. The central bank acknowledged the risks due to the COVID-19 outbreak in the UK. Policymakers voted unanimously to keep interest rates at 0.10% and asset purchases at 645 billion.
– German consumer confidence hits its lowest level since May 2009
The data was not surprising, given the current global economic conditions. The forward-looking indicator dropped to 2.7 from 8.3 in March. Forecasts were around a drop to 7.7. Gfk, the German institute behind the numbers warned that businesses should brace for a recession.
– European businesses slip into contraction, according to latest March data
The Eurozone composite PMI from IHS Markit saw a drop to 31.4 in March, compared to 51.6 in February. A reading below 50 suggests contraction. This was the biggest monthly dip since July 1998. The services sector was obviously the hardest hit as the service PMI fell to 28.4 in March.
Upcoming Economic Events
– Investors brace for a grim outlook
The economic week ahead comes with some big-ticket items from the United States. These include the ISM’s PMI reports and Friday’s payrolls report. Given the conditions, investors are bracing for a grim reading this week as data will reveal the economic fallout due to the pandemic.
– The US payrolls report
Last week, unemployment claims jumped to three million which set the markets abuzz. This Friday’s payrolls report will no doubt be interesting against this backdrop. Forecasts show an 81,000 decline in the payrolls amid wages also rising at a slower pace of 0.2%. The unemployment rate is forecast to jump to 3.8%.
– Eurozone services PMI to take a big hit
Following last week’s flash PMI figures, the final manufacturing and services PMI numbers for March will be due this week. Investors forecast that the services sector will be hit hard, as seen from the flash reports. This could potentially mean that businesses will continue to struggle amid the economic slowdown due to the pandemic.
– China’s manufacturing PMI to rebound
A month after China’s manufacturing PMI fell to all-time lows of 35.7 in February, the forecasts are optimistic for March. Economists expect a headline reading of 44.9 for the month. This marks a stark recovery on the manufacturing activity. At the same time, it could also signal some optimism for the global economy
