After the recent soaring on Wall Street, investors are selling strongly before the weekend. They prefer to be on the safe side and take profits during the Corona crisis. This turbulent week ends with a double-digit week plus.
After a three-day rally, investors took profits on Wall Street – especially before the weekend. In the last few minutes of trading, sales were strong again. However, some traders were surprised by the recent upswing on the US stock markets, which has brought some indices back into bull market mode. Even today, the losses relative to the massive gains of the week remained subdued. The Dow Jones index gained nearly 13 percent in the week, the biggest plus since 1938.
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The USA is developing into the new center of the coronavirus pandemic with case numbers above those from China – at least as far as the official information from Beijing is concerned. The United States is still a long way from a vertex. In view of the recent rally, this development almost invites profit-taking, it was said in the trade.
Of the Dow Jones index lost 4.1 percent to 21,637 points, S&P 500 and Nasdaq composite fell by 3.4 and 3.8 percent, respectively. “We want to see the top of the virus ‘s spread curve because then the clock for the lifting of the restrictions begins to run,” investment strategist James Athey of Aberdeen Standard Investments summed up investors’ hopes. But investors are currently concerned about the extent and duration of the recession, it said. Euphoria about the government’s stimulus package and also about the US Federal Reserve’s flood of money is slowly ebbing away. “Is that really enough?” Asked market strategist Mike Bell from JP Morgan Asset Management on behalf of many investors with a view to economic aid.
Worries were fueled by US consumer sentiment that crashed in March due to the virus epidemic. The corresponding index calculated at the University of Michigan dropped to 89.1 from 101.0. This is the fourth largest decline in almost 50 years. Economists had expected a level of 90.0. In the first survey in the middle of the month it was 95.9. And according to data from Transunion, income is currently negatively affected by the pandemic in six out of ten American households. Another 10 percent of US adults expect household income to decline in the future.
Similar to the stock market, some gains were made on the gold market. The troy ounce fell 0.4 percent to $ 1,623. Traders saw the rally of the precious metal only interrupted, because the global flood of aid programs should keep the demand for classic inflation protection high, it said.
Dollar under pressure again
The prospect of a huge inflation of the US central bank balance weakened the dollar further. The ICE dollar index lost another 1 percent after this important relation to a currency basket had already dropped 1.7 percent the previous day. The dollar index thus posted the largest fall since 2009 in the current week. Traders also referred to the global currency swaps of the central banks to alleviate the dollar shortages. These had previously pushed the dollar index to a three-year high.
In view of the Covid 19 crisis with the shutdown of economic activities worldwide, the oil market is currently oversupplied, the crude oil trade said. The demand is breaking down and not much is happening on the supply side. US light oil of the WTI grade fell by another 4.5 percent to $ 21.58 per barrel, while European reference oil of the Brent type lost 5.8 percent to $ 24.81.
Cruise line prices collapsed among individual stocks – again. The companies should not receive any US aid as part of the rescue packages. Carnival and Royal Caribbean Cruises lost a good 20 and 15 percent respectively.
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The Disney share dropped by 8.5 percent. The entertainment company will close parks in the United States and pay employees by April 18. Lululemon Athletica’s share price fell 6 percent. The retailer of specialty casual wear outperformed market expectations for fourth quarter earnings, but was unable to look ahead to the current fiscal year due to the coronavirus pandemic. KB Home fell 5.9 percent. The construction company exceeded analysts’ expectations for the first business quarter. However, the outlook for 2020 was cashed. Hilton lost 5.5 percent. The hotel chain has introduced measures in response to the pandemic, including layoffs, suspension of share buybacks, and cost savings.
Progress software fell 5.3 percent. The software company disappointed in sales in the first business quarter. The shares of the technology group Dell lost 8.9 percent. The company has withdrawn its outlook for fiscal year 2020/21 due to the pandemic.
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