It was a shortened trading session last week with many markets closing on Friday for Labour Day holidays. Financial markets ended the week broadly stronger with the exception of the US market. Sentiment was boosted when announcements were made by some countries stating that it was looking at easing its lockdown measures.


In the news

  • To date, there have been more than 3.4 million confirmed pandemic cases being reported globally, and resulted in more than 240,000 fatalities. With patchy containment measures being put in place, the number of confirmed cases in the US have continued to rise, and stood at 1.1 million cases as of last week.
  • Despite not seeing an apparent fall in the rate of new cases, some governors in the US have announced that they will be looking at re-opening their economy – a move that was received with mixed reviews, but was taken as a boost in sentiment for markets.
  • News that a Gilead’s drug had performed well in tests to reduce the severity of the disease in patience had also provided support for the markets. 
  • We also saw the US President steering the focus away from the pandemic when he announced the possibility of new trade sanctions on China as retaliatory measures against China’s alleged failure to provide early cooperation on the pandemic.
  • European markets enjoyed a spark after announcing that it was looking to ease its lockdown measures. However, the decision by the ECB to deny additional stimulus injection did put pressure on markets. 
  • As the pandemic crisis is prolonged, France’s, and Italy’s economy have official fallen into recessionary zone.
  • Japan stated that it will look to maintain the current state of emergency until the end of May, or till the first week of June after its goal of reducing human-to-human contact by 80% was not achieved. To date, the country has more than 14,000 confirmed cases, and 450 fatalities from the pandemic.
  • Oil price held steady as the implementation of production cuts start.  The WTI saw some reprise last week, rising 21.6% after having fallen more than 66.0% this year. 
  • Gold price remains a top performer on a YTD as uncertainties prevail in global markets. The 0828EA, which tracks the performance of the LBMA Gold Price has risen 18.0% in MYR terms over the same period.


In other economic news

  • The pandemic crisis continued to take its toll on the US economy.
    • 1st quarter GDP shrank by 4.8%.
    • Manufacturing PMI dropped from 48.5 in March to 36.1 in April after business activity was seen taking a nose dive.
    • 3.8 million Americans claimed unemployment benefits last week
    • The total unemployment claims for 6-weeks now stand at 30 million (approximately 18% of the US working population).
    • Interest rates were kept unchanged at the last FOMC meeting.
  • China continues to face pressures on its export front as recessionary concerns loom over global economies.
    • Manufacturing PMI was recorded at 49.4 in April, from 50.1 in March.
    • Official manufacturing PMI remains in an expansionary stage – at 50.8 in April (from 52.0 in March).
  • ECB’s President, Christine Lagarde, reaffirmed markets that it was “fully committed to doing everything possible in its mandate to support every citizen of the Eurozone”.  
  • It maintained its key deposit rates at -0.5%, and stated that it will continue with its plans to buy more than Eur 1 trillion in bonds to support the financial markets.
  • The BoJ made an equally accommodative move by removing its annual quota of 80 trillion Yen and have an unlimited quota to purchase government bonds.


What to look out for ahead

  • Markets will be looking out for the release of US’ unemployment data this week, with many expecting a big jump in the number as most states remain on lockdown amidst the pandemic crisis.
  • Bank Negara will meet tomorrow with many expecting further cuts to interest rates on the back of this more challenging economic landscape.


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



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