Weekly Market Update

Author : Rachel Poole
Date : May 30, 2020

Global Market News

Global equities make gains
Global equities made gains this week as more economies reopened and hopes for a Covid-19 vaccine spread. The yield on the US 10-year Treasury Note was little changed, dropping slightly to 0.65% Friday afternoon from 0.66% at the beginning of the week. The price of a barrel of West Texas Intermediate crude oil continued its rise, increasing more than a dollar to $35.07. Surprisingly, growing tensions between the US and China affected the markets very little this week.

China commissions fiscal stimulus
The National People’s Congress of China has commissioned fiscal stimulus worth more than 4% of GDP. This stimulus will be primarily used to boost jobs and incomes, with employment being the top priority of China’s economic response to the crisis. The yuan is weakening and investors are wondering if China will cut bank reserves or let the currency fall further.

Coronavirus Updates

Covid-19 by the numbers
Global Confirmed Covid-19 cases: 5,890,000 Global Covid-19 deaths: 363,000
US Confirmed Covid-19 cases: 1,780,000 US Covid-19 deaths: 104,000
*As of Friday evening

Reopenings continue
Phased reopenings of many economies picked up steam this week as restrictions continue to be eased. Measures of activity, such as the movement of mobile phones, reveals that more people are leaving their homes. Hotels and airlines have reported an uptick in customers as citizens are itching to get out of the house. Germany’s intra-European travel warning will be lifted on June 15th and Spain will be getting rid of their mandatory two-week quarantine for visitors starting July 1st. Japan’s nationwide state of emergency was lifted this week and the Governor of New York announced yesterday that New York City, the city hardest hit by the virus in the US, would begin reopening on June 8th. Markets made significant gains this week in response to the reopenings.

Trump withdraws the US from the WHO
On Friday afternoon, President Trump announced he will be withdrawing the US from the World Health Organization (WHO). He claims the organization did not take the proper steps to warn the world of the danger of the coronavirus due to pressures from Beijing. In his speech the President stated, “China has total control over the World Health Organization” and said it is no longer worth it for the US to be a member. The withdrawal will most certainly have an effect on the multilateral organization’s ability to fight Covid-19 and coordinate a global response to the pandemic.

Geopolitics Spotlight

China to impose national security law on Hong Kong
China will impose a new national security law on Hong Kong which will severely limit the freedom and autonomy of the region. Under the law activist groups could be banned, courts could impose lengthy jail sentences on national security grounds, and mainland security agencies could operate in the city. The act has drawn international condemnation from countries such as the US, the United Kingdom, Canada, and Australia, among others. In a press conference Friday afternoon, President Trump announced the end of Hong Kong’s special trading status because it can no longer be considered autonomous from mainland China. President Trump has made no announcement regarding the status of the phase one trade deal with China but the prospects of the agreement are looking grim.

Congress passes Uighur bill The US House of Representatives overwhelmingly passed legislation to punish China for detaining more than a million Uighur Muslims. The bill calls for sanctions against those responsible for the repression of Uighurs and other Muslim groups in the Xinjiang province. The bill urges President Trump to take a more aggressive stance on human rights abuses in China.

Corporate News

Trump targets social media companies President Trump is preparing to sign an executive order targeting social media and tech companies. The order is expected to curb the legal protections that shield tech companies from liability for the content posted on their platforms. This would open the door for federal officials, and others, to punish social media companies, which would in turn expose tech companies to more lawsuits. President Trump’s action comes after Twitter labeled some of his tweets with fact checks.

Airlines begin layoffs American Airlines told employees this week that it will need to reduce its management and support staff by 30%. The airline carrier has extended buyouts to those who volunteer until June 10th. If there aren’t enough volunteers, the company will have no other option than to make forced cuts. Rounds of layoffs are making their way through the airline sector. United Airlines has also announced plans to cut management ranks by 30% when the government’s Payroll Protection Plan expires this fall.

Image of the Week

Society will not be the same after lockdowns are lifted

Video of the Week

Minneapolis protests following the killing of George Floyd spiral out of control

Source: DW News