Weekly Market Update

Author : Rachel Poole
Date : June 13, 2020

Global Market News

Global equities falter
Global equities took a tumble this week after markets dropped close to 6% on Thursday amid concerns over an increase in Covid-19 hospitalizations, excessive market speculation, and a pessimistic economic outlook from Federal Reserve Chairman Jerome Powell. The yield on the US 10-year Treasury note plummeted to 0.71% from 0.90% last week while the Cboe Volatility Index (VIX) rose more than 6 points to 36 over the week. The price of a barrel of West Texas Intermediate crude oil fell to $36.41 from $39.10.

Federal Reserve predicts a 6.5% contraction
Though the US Federal Reserve took no new action at the committee meeting this week, they did take a much more cautious stance, suggesting the recovery is going to take longer than initially expected. Powell assured everyone that they are not thinking about raising rates but did say rates would remain near zero through the end of 2022. Fed policymakers predict the US economy to shrink 6.5% in 2020 but then rebound to 5% in 2021.

Updated Market Figures

Coronavirus Updates

Covid-19 by the numbers
Global Confirmed Covid-19 cases: 7,270,000 Global Covid-19 deaths: 413,000
US Confirmed Covid-19 cases: 2,090,000 US Covid-19 deaths: 116,000
*As of Friday evening

US hits 2 million Covid-19 cases
On Wednesday, the US hit the grim milestone of 2 million coronavirus cases reported. The number of new infections is rising in at least 20 states but lockdown measures continue to ease. Arizona, for example, reported a record high 1,654 new cases on Friday. Dr. Anthony Fauci, member of the White House Covid-19 task force, warned that the large crowds of protesters and relaxation of social distancing measures could lead to a significant spike in infection rates. Similarly, the number of cases is rising rapidly in many developing countries, including Mexico and India, but they continue to lift restrictions to bring back their economies.

Geopolitics Spotlight

UK-EU talks move forward
British Prime Minister Boris Johnson and President of the European Commission Ursula von der Leyen will be holding trade talks on June 15th. After the last round of talks earlier this month made no progress, the United Kingdom is prepared to agree to a temporary “soft border” with the European Union at the end of the transition period, December 31st.

China and India de-escalate
China and India have taken steps to de-escalate long-standing tensions on the border that rose to a high at the beginning of May after Chinese troops encroached on India’s side of the Line of Actual Control. Both sides have scaled back troops and equipment but there has been no immediate withdrawal of troops from the region. Negotiations to reach an agreement began this week. No official agreement has been announced.

Corporate/Sector News

OECD forecasts deep global recession The Organization for Economic Cooperation and Development is forecasting a deep global recession in 2020. Their current expectations are for a 6% global contraction in 2020 and a 7.6% contraction if there is a second wave of Covid-19 infections. The organization is predicting the US to shrink 7.3%, China to contract 2.6%, and the Eurozone to drop 9.1%.

Grubhub to be bought by Just Eat Takeaway Grubhub will be bought out by the Amsterdam-based company Just Eat Takeaway for $7.3 billion. The announcement comes shortly after reports that talks between Uber and Grubhub reached an impasse. Just Eat said the new combined company will be catered to the online food delivery markets in the U.S., the U.K., the Netherlands and Germany. The acquisition will make the combined company the largest online food delivery platform outside of China.

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Source: DW News