Weekly Market Insight

Latest Economic & Market Update 28th May 2020

28th May 2020

Good afternoon, it is 28th May 2020 and here is your economic and market update from BlackBee.

Today we are going to focus on:

  • S&P500 closes above 3,000 & Dow Jones closes above 25,000.
  • Hong Kong special trade treatment with the US could be in jeopardy.
  • ECB president Lagarde expecting 8-12% contraction in GDP.

Investors remained cautious over the escalating tensions between the US and China, however, hopes of a fast economic recovery overcame these worries as stocks pushed higher with the S&P500 closing above 3,000 and the Dow Jones Industrial Average closing above 25,000 for the first time since early March.

Tensions have been high between the US and China recently and fuel has been added to the fire. China is trying to enforce national security legislation which threatens freedom in Hong Kong, a region that receives special trading status with the US. Following the approval of the legislation, US Secretary Mike Pompeo announced yesterday that Hong Kong is no longer considered autonomous from China, threatening the special trade treatment Hong Kong receives and increasing tensions with China. The decision threatens many US businesses in Hong Kong and could hurt an already weak global economy. The decision that Hong Kong is no longer autonomous from China does not trigger an automatic action, however. President Trump will have to decide what the course of action will now be.

ECB president, Christine Lagarde is set to announce the latest monetary policy decision next week. On Wednesday, she warned that the current crisis will be double the severity of the 2008 crisis as GDP could contract by up to 12%. Earlier this month the ECB forecast a mild scenario that saw GDP contracting by 5% this year, but this is already being considered outdated by Ms Lagarde. Low interest rates will keep the Eurozone from another financial crisis despite many countries raising more debt according to Lagarde. Despite the interest rates being low at the moment, these could be subject to change as investors reassess risk as economies begin to reopen. The ECB has so far maintained low interest rates and has stated they are ready to step in again when needed.

Best & Worst Performers of Large Cap Stocks on Wednesday
Click the image to enlarge

Global Market Update
(as at close of markets 27/05/2020)