Easing Optimism Boosts Markets
Fiona Cincotta May 5, 2020 7:21 AM
Investors are taking stock of the gradual reopening of economies whilst oil also picks up on greater fuel demands.
Following a late rebound on Wall Street and a rise in Asian stocks overnight, European bourses are heading towards a stronger start on the open. Investors are taking stock of the gradual reopening of economies whilst oil also picks up on greater fuel demands.
The rebound in oil has been largely driven by an increase in demand as governments ease lockdown restrictions. Data from the Cushing storage (largest oil storage tank in the world, responsible for 13% of total US storage) showed inventories rose 1.88mb last week, the smallest increase since mid-March and the surest indication that oil demand is slowly picking up.
Attention will now turn to tomorrow’s API data and then EIA data, which could well confirm that a gradual recovery is underway.
Service sector PMI bottom
The pound is pushing higher, snapping a three-day losing streak against the Dollar as the number of coronavirus daily deaths fall to levels last seen at the end of March as the UK awaits further details on the UK’s exit strategy.
Today the service sector PMI is expected to drop to 12.2 in April (final), reflecting a full month of lockdown. The very measures implemented to slow the spread of covid-19 caused services sector demand to evaporate. With the UK economy set to gradually reopen this should represent a bottom. With the market expecting a horrifying number, its unlikely to rock the boat much at these levels. A significantly worse reading (if possible?!) could.
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.