MarketDeal24.Com – If volatility and uncertainty is something which makes the markets across the world shiver then this week is going to be more challenging than anything we have ever seen before. In the face of hard evidence President of the United States Donald Trump is finally recognizing that the ground reality about the COVID-19 pandemic in his country more severe than what he has been projecting. On the economic front, we are confronted with some uncomfortable data which have started showing the symptoms of negative impacts that the ongoing outbreak is unleshing on the economy.
The NFP last week was of course, a piece of this puzzle. Prices of crude oil is all set to demonstrate more volatility this week as the price war between Russia and Saudi Arabia is showing no signs of abeting. Besides, the meeting minutes of Federal Reserve, scheduled to come out on Wednesday, is expected to shed some light on the mindset of US policymakers.
Here are the five most important things described in detail which we believe a market participant should consider if he or she wants to survive the market this week.
On a note of caution, US President Donald Trump has warned his fellow Americans to get ready for a big jump in the numbers of COVID-19 fatalities in the coming days.
“There will be a lot of losses of lives,” Trumped remarked at White House briefing on Saturday.
The United States, the world’s largest economy, has the world’s highest number of known infections of coronavirus. As per the news reports, total infections in the US stands at 306,000 and the death toll is 8,300.
Trump administration health experts are of the opinion that between 100,000 to 240,000 American could loose their lives even if the social distancing measures are followed.
Volatility in the prices of commodity especially in the crude oil is adding an extra layer of uncertainty to the already complex situation that is prevailing in the oil market. The prices of oil dipped 70% from January this year hights bouncing before President Trump’s claim to have brokered a Saudi-Russia deal to cut output.
Oil prices are supposed to experience further volatility as the meeting between OPEC and Russia has been postponed due to the ongoing brawl between Saudi Arabia and Russia.
Oil, famously known as black gold, recovered from last week’s depths of $20 per barrel with international benchmark Brent stabilizing at $34.83 on Friday, still far below the $66 level at the end of 2019. Prices had their biggest one-day bounce ever on Thursday when Trump said he expected Russia and Saudi Arabia to announce a major production cut.
After a very grim reading by Non-Farm Payroll (NFP), the initial jobless claim that is schedule to come out on Thursday is more likely to define the theme of the markets across the globe than anything else. Despite containment measures by the Trump administration, the coronavirus situation is turning for worst meaning economic slowdown is gradually engulfing the entire United States.
Economic experts are of the view that this week the initial jobless claim can soar up to 50,00,000.
An analyst call Josta Young of UBS Capital said, “With risks skewed towards the containment measures penetrating well into May, we would not be surprised to see joblessness hit 15% in coming months with our best guess being that the economy contracts 40% in 2Q.”
Federal Reserve, the central bank of the United States is going to make public its latest meeting minutes on Wednesday which will be closely watched by the market participants. Investors are expecting this report to highlight details on the decisions to deliver emergency rate cuts and inject waves of stimulus into the economy.
As per a release by the Fed, Chairman Jerome Powell and US President Donald Trump held a telephonic conversation on February 7 and again on 26th of the same month. What exactly transpired is far from clear at this stage. But Fed chief Powell issued a statement outlining the evolving risk from the COVID-19 pandemic.
The Fed announced an emergency rate cut on March 3.
Officials of finance ministries of different European Union member states are scheduled to gather together this week to hold a discussion regarding how best to cope up with the coronavirus situation. But an agreement or a specific solution is far from the sight. France, Italy, and Spain – countries hit hardest by the COVID-19 pandemic have called for the creation of Coronabonds to help those businesses affected by this outbreak but Germany and the Netherlands remained opposed to any such initiative.