Financial markets fell back into the red last week after it failed to sustain the strong run of the previous week. Economies globally continue their efforts to contain the spread of the pandemic as reported cases continue to rise - hitting the 1 million mark last week. The US now stands as the country with the most infected cases as it struggles to keep the pandemic at bay. Volatility continued over the week with sentiment being buoyed by more stimulus packages being released by central banks.
In the news
- Global financial markets slid lower last week as the pandemic worsened. To date, more than 1 million infection cases had been confirmed, with 65,000 fatalities.
- While economic activity in China is gradually resuming after having controlled the spread of the pandemic within its country, the situation is seen to be worsening in countries outside of China.
- US has surpassed all other countries with more than 300,000 confirmed cases and 8,000 fatalities as it continues to struggle to keep the spread under control.
- Markets had slid lower over the week, remaining volatile but saw a lift in sentiment as central banks announced more plans to bolster the pandemic impact.
- BNM released a report forecasting the domestic GDP to shrink to between -2.0% to 0.5% this year as the impact of the pandemic, and slumping oil price take its toll on the domestic economy.
- Optimism surrounding a possible end to the waging oil war between Russia and Saudi Arabia helped push oil prices higher. Oil price rose 32.7% last week in MYR terms to end the week at USD28.34 per barrel. Despite the strong performance last week, oil price is still 50.6% lower on a YTD basis.
- A total of USD4.9 billion was flowed into physically-backed Gold ETFs, boosting the stock pile by an additional 3,000 tonnes of gold. The LBMA price ended flat over the week in MYR terms, and marginally lower in USD terms – closing the week at USD1,609.75 per ounce. The precious metal remains the only positive performer in the sea of major indices on a YTD basis, returning 12.6% in MYR terms.
- On Bursa, 0828EA remains the first and only Shariah compliant physically-backed Gold ETF that is listed on the local bourse.
In other economic news
- US released weak labour indicators as the pandemic impact becomes more apparent.
- Unemployment claims doubled from the previous week to 6.6 million last week.
- Non-farm payrolls signalled that 700,000 jobs were lost in March.
- March’s unemployment rate spiked to 4.4% for the period ending March 14 - which was prior to the lockdown, so final monthly numbers may deteriorate further.
- China’s central bank announced several measures to bolster its economy against the impact of the virus.
- The PBoC slashed its reserve requirements ratio (RRR) for small and mid-sized banks to 6% – a move said to release more than USD56 billion into the economy.
- The RRR cut would be for 100bps, and carried out in 2 equal tranches; once in mid-April, and again in mid-May.
- This marks the 3rd cut made by the PBoC this year, and the 10th since 2018.
- Banks’ excess deposits will also be reduced from 0.72% to 0.35% in a bid by the government to encourage lending.
- China indicated improved economic activity in March after a challenging February.
- Service PMI climbed to 26.5 to 43.0 in March. The sector remains under pressure as demand from the overseas market is expected to be impacted as countries are locked down as a containment measure.
- Manufacturing PMI also rebounded from 40.3 in February, to 50.1 in March.
What to look out for ahead
- Central banks are said to be gearing up for more measures to be released to aid its respective economies.
- The Reserve Bank of Australia has indicated that it is preparing its third fiscal plan.
- Germany has also indicated that it will be increasing its support for the small and medium-sized businesses, with expectations that the plans could be in the region of EUR500 billion.
- Development on the pandemic will remain a focal point globally, and how the different economies would address and overcome the situation.
ETF strategies at TradePlus
- To Hedge:
- 0828EA – a Gold-backed ETF widely used as a storage of value in times of market uncertainty.
- 0833EA – a HSCEI Inverse strategy that helps hedge your portfolio against weakness from the performance of China companies listed on the HKex.
- 0831EA – the NYSE FANG+ Inverse strategy that hedges against the performance of tech stocks listed in the US.
- To Add Position:
- 0829EA / 0829EB – a strategy that gives investors exposure into the consumer focused sector through China companies listed in HK, and the US.
- 0832EA – a 2X leveraged strategy on the HSCEI that captures 2 times the performance of China companies listed on the HKex.
- 0830EA – a 2X leveraged strategy on the NYSE FANG+ that captures 2 times the performance of US listed tech stocks.
A look at the performance of the TradePlus ETFs, and major global indices
Learn more about TradePlus ETFs
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