Weekly market update : Investor morale remains high

Monday April 20

Weekly market update

Despite a health record that continues to worsen, particularly in the United States, indices are showing resilience. The Nasdaq100 score speaks volumes, with a performance of nearly 8% over the last week and more than 25% since the end of March. At the time of the first quarterly results, risky assets are not being ignored.

Indexes The CAC40 ended last week close to breakeven while the DAX gained 0.88%. For the peripheral countries of the euro zone, Italy fell by 2.4%, while Portugal lost 0.4% and Spain 2.1%. In Asia, the Hang Seng limited its losses to 0.10%, contrasting with the advances of the Shanghai Composite and the Nikkei at 1.6% and 2.04% respectively. In the United States, performance remained clearly positive. The Dow Jones gained 2.0%, the S&P500 6.5% and the Nasdaq100 rose by nearly 8% (see graph). Strong push from the Nasdaq100

Commodities Despite the long-awaited announcement of a drop in production between OPEC and its partner countries, the price per barrel has failed to rebound. The sluggishness is still present, with operators rightly concerned about the significant decline in demand for crude oil due to containment measures. The IEA and OPEC scare reports on the state of demand, coupled with further increases in U.S. inventories, have bombed prices this week. WTI is trading at its annual lows of around USD 18, while Brent is trading at USD 28 After setting a new annual record at USD 1,747, the ounce of gold stabilized near USD 1,700. Silver consolidates above USD 15. Copper continues its gentle forward march at USD 5100, as does aluminum, which regains colour at USD 1476 per metric ton.

Equities markets HelloFresh, everybody's taking it off. In the stock market, it happens - it's quite rare - that some promising stocks become "must-haves" for portfolio managers. And when all the stragglers have positioned themselves, that's usually the signal to go elsewhere. But not always. Take HelloFresh. The German company is a European internet success story whose performance over the last two years has enabled it to reach operational equilibrium faster than expected. Nearly every business has it in its portfolio. Some might have been tempted to exit. But everyone quickly understood that the case was going to receive a second boost thanks to its perfect positioning in the face of coronavirus (home delivery of ingredients to make recipes). The stock hit a new all-time high of EUR 33 last week. HelloFresh has gained around 275% in 1 year and 75% since the beginning of the year. This is the second best performance of European stocks weighing more than €5bn in 2020. MarketScreener's stock selection tools allowed us to identify HelloFresh, which is included in the Europa One fund and the European portfolio. HelloFresh's outperformance against major indices

Bond market In the U.S., the US 10-year is still showing remarkable stability while the country's economic statistics are vacillating. The T-bond thus posted a return of 0.64%. Rates are easing on major European signatures. The French OAT is approaching zero yield while the German Bund is sinking into negative territory at -0.46%. The Swiss 10-year bond followed the same trend at -0.45%. This widens the gap with Italian and Spanish government yields, which continue to rise. Spanish 10-year yields stabilised at 0.83%, while Italian construction yields approached 2%.

Forex market Sequences of optimism and worry are punctuating forex markets. The greenback has been neglected by traders who have regained their appetite for risk, or sought after as a safe haven currency, but is still dependent on the emotions of traders, whose psychology is being tested by the calamitous economic data from the United States. This week, the U.S. dollar gained ground against its counterparts. The EUR/USD pair fell to USD 1.08, and the GBP/USD pair to USD 1.24. However, the USD/JPY pair is almost flat at JPY 108. The single currency continues to weaken both against the Swiss franc at CHF 1.05 and against the yen at USD 116.7.

Economic data Western statistical institutes got into the thick of it last week with the first monthly indicators for March, which carry the stigma of coronavirus. Data from employment and the morale of purchasing managers had already set the tone. They are confirmed, unsurprisingly, by other indices, such as the -4.5% contraction in retail sales, -5.4% in industrial production and the Empire State index at -78.2 points in the United States. The International Monetary Fund updated its economic expectations. It expects world GDP to fall by 3% this year, before a strong recovery of 5.8% in 2021 (see illustration below). This week, the ZEW German Financial Confidence Index (Tuesday) will be closely scrutinized, as will the weekly U.S. Oil Inventories (Wednesday). On Thursday, it is the Flash PMI indicators that will monopolize attention, with the first indications for April, which will certainly be particularly deteriorated. On Friday, the German Ifo Business Confidence Index and US Durable Goods Orders will close the week. IMF Economic Expectations

Investor morale remains high Operators seem to have found a vaccine against the publication of catastrophic economic indicators. Unsurprisingly, these are very bad because of the containment measures implemented around the globe. While investors like to scare themselves and are willing to momentarily give in to the many concerns that the global pandemic poses for the world's economies, it is clear that the slightest piece of data indicating that the epidemic is under control sets markets on fire. It is precisely in this context that companies will have to present their quarterly results and communicate on the adjustment of their guidance. Naturally, they will have to use tact so as not to dampen the morale of investors, which have so far been extraordinarily optimistic.