Weekly Digest - INVESTEC
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In a week with little concrete progress on the virus and where the economic data began to catch up with the reality of the COVID-19 shutdown, most demonstrably in employment reports in the US (6m new jobless claims), financial markets retained their poise. The VIX “volatility” index fell to 47 from 65 at the close of the previous week and down from a record intra-day high of 85 on March 16th.
Part of the reason for greater stability is the reassuring behaviour of fixed income markets, which continue to demonstrate that the measures taken to ensure their efficient functioning are working.
Oil was the stand out feature of the week, rallying by 40% as Russia and Saudi Arabia signalled a willingness to re-enter talks to stabilise the oil markets – with President Putin apparently suggesting that Russia would be happy with oil prices around $40.
– There are now just below 1.3m cases globally with over 300,000 infections in the US
– The growth rate of the number of infected people outside of China continues to decline. Last week the average growth rate was 10% per day vs 14% per day the week before and 18% per day the week before that (i.e. it is still a growth rate, we are some way away from the number of new cases declining worldwide).
– Europe continues to making progress (Italy, Spain), but the major problem continues to be in the US where the number of infections is still growing at 34k per day. The US now accounts for 37% of all new infections.
– New Threats?
o Indonesia: official numbers indicate less than 100 deaths due to COVID -19, but Reuters is reporting that there were 4,000 burials in Jakarta during March – a number 40% higher than any other month since January 2018
o Re-infections in China, Singapore & Hong Kong are becoming a concern
o Japan has seen cases in Tokyo top 1,000, sparking concern of an acceleration
– In Europe, plans are beginning to be made for soft-easing of the lockdowns