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Good morning, Bull Sheeters. We look to close out a stellar April on a high note. Even oil is climbing.
Let’s take a look at what’s moving markets.
Markets update
Asia
- The major indices were all trading higher in afternoon trade, led by Japan’s Nikkei.
- Zero cases. South Korea reported its first 24-hour stretch of no new local cases (there were four imported cases) since February.
- China reported April factory activity slowed slightly—still, it was below consensus estimate. Export orders also fell, suggesting the road to recovery will be a somewhat lengthy one.
Europe
- European bourses came out of the gates climbing. At the open, Germany’s DAX was up 1.1%, before retreating.
- The ECB meets today. The big question: will the central bank announce any further measures to keep the eurozone economy from falling into a deep recession? Its biggest move to date was a 1 trillion euro ($1.1 trillion) asset-purchases plan.
- Something dramatic may be needed. Spain and France reported big hits to their economies in Q1.
- To company news now...walloped by the tumultuous oil market, Royal Dutch Shell announced today it will cut its dividend, a first since World War II. Its profit fell by 46% last quarter. French bank, Societe Generale, meanwhile, reported a surprise loss. Unlike its peers, trading revenue fell precipitously last quarter.
U.S.
- The Dow, S&P 500 and Nasdaq futures point to a flat open. Yesterday, the big three soared, led by the Nasdaq.
- The markets took off before the bell yesterday after Gilead Sciences revealed details of a promising trial behind remdesivir, a drug that could prove to be an effective treatment for COVID-19 patients.
- Facebook and Microsoft were trading higher in the after-hours market as both reported strong results yesterday evening.
- Tesla also posted an earnings win, but it was CEO Elon Musk who stole the spotlight. Musk went into an epic rant about the lockdown measures, calling them “fascist.”
- Who’s up today? Apple, Amazon and Visa, to name a few.
- Yesterday’s Q1 GDP figures were worse than expected. The 4.8% contraction was the worst since 2008, at the depths of the global financial crisis. Q2 will be far worse.
Elsewhere
- Gold is up, as is the dollar.
- Crude extends its rally into a third day. WTI futures were trading around $16.80/barrel, well above Tuesday’s lows. Brent is advancing too, above 25 bucks per barrel.
The April surprise
After a tumultuous February, and a brutal March, April has been one for the bulls. The global equities markets are trading mostly sideways this morning, but this past month has been a huge cure-all for investors’ portfolios.
From Tokyo to New York, equities have been soaring, as today’s chart show.
Stock traders have shrugged off a collapse in oil prices, millions of COVID-19 infections, record unemployment, GDP wipe-outs and a parade of dreary corporate results to post solid gains over the past month.
What gives?
Veteran markets observers say investors are focussing on COVID-19 infection data, and little else. That was certainly true yesterday. Dismal GDP numbers were completely overshadowed by the remdesivir drug trial news.
As the brilliant Marketear blog notes, investors have gone “from fear to FOMO,” seeing any sign that the worst is behind us as a buying opportunity.
Goldman Sachs, for one, warns we could re-test lows in the coming weeks, particularly if the rebound is a protracted one.
State by state, country by country, we’re seeing lockdown measures lifted, so we should know more about the economic bounce-back fairly soon.
***
Have a nice day, everyone. I’ll see you here tomorrow.
Bernhard Warner
@BernhardWarner
[email protected]
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Today's reads
“The single best trade of all time.” That’s what one former Wall Street heavyweight called hedge fund king Bill Ackman’s wager, back in February, that the coronavirus would be way worse than investors were factoring in. Ackman bet against the markets before things got ugly, and exited the hedge at the absolute bottom, netting a cool $2.6 billion. He detailed the ins and outs of the trade in a recent podcast.
Bumpy Landing. To conserve cash, Boeing will slash production and layoff 10% of its staff in the hopes of going cashflow-positive some time next year. Boeing shares closed up 5.9%. As Bloomberg notes, the stock “has plunged 57% this year, the worst drop on the Dow Jones Industrial Average.”
Ahead in the cloud. Microsoft’s “beat” yesterday stunned even the biggest tech bulls, sending shares higher in after-market trading. Cloud, gaming and tablet sales were big lifts in Q1. But it’s not all blue skies for MSFT. Coins2Day’s Jonathan Vanian picks apart the earnings to find a trio of business lines that are particularly vulnerable to an extended COVID-19 shutdown.
(Some of these stories require a subscription to access. There is a 50% discount for our loyal readers if you use this link to sign up. Thank you for supporting our journalism.)
Market candy
This date in history
April 30, 2009
On this date 11 years ago, at the height of the global financial crisis, Chrysler filed for bankruptcy. The move paved the way for the automaker— one of the original Big Three—to merge with Italy’s Fiat, and stay alive. The news was cheered in Washington. President Obama, in remarks at the White House, called it "one more step on the path to Chrysler's revival." It was hardly a smooth ride, however. Plants and dealerships closed. The unions were furious. And the Treasury had to lend it billions to get through the year.
