Friday’s Covid-19 Update: Graph of the week- Spread of Italian & German 10 Yr Govt. Bond yields | UK PMI shows historic drop | US unemployment continues to soar
Latest Covid-19 Market Update
(as at close of markets 23/04/2020 unless otherwise stated)
The price of WTI continued its rally, reaching over $17 a barrel. Stocks were on track for a gain during Thursday’s trading despite fresh figures being released on unemployment data. However, on the back of news that the first vaccine trial was unsuccessful, markets moved into negative territory for the day. The news of the unsuccessful trial dimmed hopes that there would be a quick recovery.
The number of unemployed Americans rose to 26 million last week. 4.4 million jobless claims were filed in the past week. The number of claims has dropped for a second week in a row which indicates the US may be past the peak of layoffs. More funding has been agreed for the Paycheck Protection Programme to further slow the numbers in jobless claims. As of 11th April, the number approved for the claim reached the highest on record, 11% of the total workforce, according to the Financial Times.
Earlier in the week saw the European PMI drop to record lows. The UK PMI has followed suit showing the fastest drop on record, from 36 in March to 12.9 in April. The decline could be worse as the PMI excludes the majority of the self-employed and the retail sector. Figures released also show that approximately 21,000 business in the UK collapsed in March, a 70% increase from the previous year. Loss in business and the significant fall in the PMI with falling inflation levels in the UK, leaves hopes of a V shaped recovery very unrealistic.
In response to pressure from the Bank of England, the chancellor of the UK is now considering guaranteeing loans of up to £25,000, for small businesses who are struggling to get loans due to credit ratings. In an attempt to prevent even more small businesses going bust, which would further increase the difficulty of recovering from the crisis, the scheme could be launched as early as next week.
Source: BlackBee, Financial Times, April 2020