Last week, things moved for the better, at least in terms of developments on global financial markets. In particular, we can thank two key central banks, the US Fed and the European Central Bank.
On Monday Fed announced [unlimited] purchases of virtually all debt securities except for high-yield corporate bonds. Thus, the concept of quantitative easing has taken a new dimension. Also ECB has begun to massively support European bonds market via its purchases. On top that US administration approved the biggest fiscal stimulus in history in the amount of over 2 USD trillion. As a result financial markets ignored the massive spread of COVID19 pandemic in Europe and the US. They ignored even the fact that US jobless claims reached a new all-time high, hardly believable 3.28 million. As a result global stock markets began to rise strongly gaining for the whole week approximately 10 %. Bonds, government and corporate, performed well as well. Czech government bond index gained 1.4 % for the whole week. However for example crude oil price continued to slide. Brent price declined by additional 8 % and is being traded at the level of 25 USD at the moment. Gold confirmed its safe haven status gaining 10 % last week, being 7 % in plus since the beginning of the year. Will the positive sentiment be maintained in the current week? Asia stock markets ended today’s trading in the red, so the negative sentiment from Friday has shifted on them. In any case we have to count with continuation of very high volatility of risky assets also in the current week.
Michal Stupavský
Investment Strategist Conseq Investment Management, a.s.