It was an auspicious start to the week as global stocks rose Monday over news that more countries, and some states in the U.S., were beginning to reopen their economies. By Monday’s close, the Dow jumped nearly 360 points, while the TSX added 222. Meanwhile, oil prices weakened sharply Monday on continued concern about oversupply, falling near their lowest level since 1999.
Global stocks were mixed, however, on Tuesday in a volatile session that saw U.S. markets reach new multi-week highs before fading later in the day, as serious questions remain about declining corporate profits, stretched equity valuations and a deteriorating U.S. economy. Weighing on markets was news that the U.S. consumer confidence index in April tumbled to a reading of 87 from 119 in March. That’s the lowest reading in about six years and a clear indication that consumer spending will face considerable headwinds for some time to come. In commodities, U.S. crude dropped 3.4% to $12 a barrel. By Tuesday’s close, U.S. markets were down slightly, while the TSX climbed 156 points.
Numbers released by the U.S. Commerce Department Wednesday showed that the U.S. economy contracted 4.8% in Q1 2020, the biggest drop in quarterly GDP since Q4 2008. According to many economists, the decline marks the beginning of a near-certain recession, with Q2 numbers expected to paint an even bleaker picture. Meanwhile, the eurozone economy contracted at the fastest pace on record, as Q1 GDP shrank over 14%.
Despite the downbeat data, N.A. markets regained considerable ground Wednesday on reported progress on a coronavirus treatment and optimism for a post-pandemic resurgence. The TSX hit a seven-week high on Wednesday, boosted by a 22% jump in U.S. crude oil futures, while the loonie saw its biggest increase in three weeks against the greenback. By the close, the TSX added 430 points, while the Dow surged more than 530. Since the market crash in February and March, the TSX and S&P 500 had both clawed back roughly 60% of the losses by Wednesday’s close.
While markets looked poised for another strong showing on Thursday, weak reports on U.S. unemployment and consumer spending tempered investors’ appetite for risk. Consumer spending fell 7.5% in March, the steepest monthly recorded decline in six decades. Meanwhile, weekly jobless claims in the U.S. hit 3.8 million, bringing the total number of newly unemployed to roughly 30 million. Despite Thursday’s modest losses, the Dow and S&P during April gained 11% and 13%, respectively.
source https://richarddri.ca/n-a-markets-regain-ground-despite-weak-economic-data/
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