Update 29-05-2020: Markets deep in the red as they stew ahead of Trump’s China press conference

The tension built as Friday went on, the markets anxiously awaiting Donald Trump’s press conference – and whatever that will mean for the relationship between the USA and China.

Though it didn’t quite match the fear shown by its European peers, the Dow Jones was hardly in a good way after the bell. Extending Thursday’s late lurch into the red, the index shed another 200 points, sending it back towards 25200.

That’s a sharp drop from yesterday’s 25800-crossing intraday highs. However, May has, to this point at least, been a solid month for the Dow – after all, it started it a point under 24100. Yet that’s the thing with a President like Trump; a month of steady growth could soon be erased in an instant.

As mentioned, the European indices – which have been stewing all day – looked incredibly worried, the threat of another US-China flare-up severely puncturing the week’s optimism regarding the various lockdown-easing measures around the continent.

The FTSE, burdened with its commodity stocks and China-facing banks, lost 130 points, tumbling below 6100 in the process. The DAX, meanwhile, was down 1.6% to 11625, with the CAC back at 4700 following a 1.4% fall. Given Trump’s domestic issues – not just coronavirus, but the riot in Minneapolis and his spat with China over his violent tweets – it wouldn’t be a surprise if he went hard at China as a distraction tactic, regardless of the cost to his beloved markets.

Update 28-05-2020: Surge in US jobless claims, revised Q1 GDP data fails to prevent ongoing rally

Even with the Dow Jones losing some of its swagger, the European indices clung fiercely to their optimistic rally on Thursday.

Thought the Dow did indeed add another 100 or so points, pushing it above 25650, it was initially expected to double that at the open. Well, it had good reason not to do so.

Once again the weekly jobless claims reading came in worse than forecast, hitting 2.123 million for the 7-day period ending May 23rd. That puts the total number of Americans who have filed for unemployment since mid-March at over 40 million. Forty! Million!

On top of that came a revised first quarter GDP reading – and not in the direction investors would have wanted. According to these latest figures, the US economy contracted by 5% at the annualised rate, worse than the initial -4.8% estimate.

None of this bothered the European markets. Nor did news of rising covid-19 cases in South Korea. Nor the increasingly troubling situation between China and Hong Kong (and therefore the USA).

For the FTSE, it had to overcome the heavy losses incurred by Standard Chartered and HSBC, which fell 4.4% and 3.4% respectively on the China-Hong Kong developments. That didn’t stop the UK index from climbing 90 points, sauntering past 6225 for the first time since early March.

The DAX warmed up as the session went on, added 150 points to hit 11800, while the CAC really let rip, surging 2.2% to strike 4775.

Update 27-05-2020: Gain ease as markets try and manage positive/negative balancing act

The giddy optimism that defined the morning session wasn’t quite sustained as Wednesday went – however, a dose of reality only tempered, rather than erased, the Western gains.

The Dow Jones ended up rising 85 points after the bell, a long way off the 25450-bothering growth suggested by the futures.

The FTSE, meanwhile, saw its own gains trimmed to 0.6%, roughly half of its initial surge, with the DAX and CAC rising 0.6% and 1% respectively, both off their intraday highs.

A balancing act was at play on Wednesday, between negatives like the US-China tensions (and how Hong Kong plays into them) and the economic hardships caused by the pandemics, and positives like the lockdown-easing measures the markets so eagerly celebrated on Tuesday, and news of  €750 billion EU recovery fund on top of a €1.1 trillion budget.

Looking beyond coronavirus, and the pound saw the gains it managed following Boris Johnson’s retail reopening plan obliterated as Brexit negotiator David Frost admitted before the House of Commons that a ‘big gap’ remains between the UK and EU. Against dollar and euro alike sterling fell 0.9%, yesterday’s relief punctured by a reminder of the other national crisis the UK is facing.

Update 26-05-2020: US open echoes and enhances European gains as NYSE resumes on-floor trading

Like in the UK, the US markets returned from their Memorial Day break keen to cling to the weekend’s positive developments, rather than the increasingly frosty relationship between Beijing and Washington.

Surging 320 points, the Dow Jones found itself venturing beyond 25000 and towards 25100, a level it last struck more than 11-weeks ago. It was a fitting landmark for a key coronavirus milestone – the return to trading on the floor of the New York Stock Exchange.

This both echoed and enhanced the situation in Europe.  The DAX finally crossed 11500 – a similar 11-week high – following a 160 point increase, while the CAC struck 4600 thanks to a 1.9% rise. What the continent brought to the table was news that both Germany and Spain are eyeing easing travel restrictions, giving a huge boost to airlines et al. (it didn’t hurt that Lufthansa was also on the receiving end of a €9 billion bailout).

Though the FTSE couldn’t get back to the levels struck not long after the open, a 1% rise still kept it above 6060. The UK saw some of its energy leeched away by the pound, which climbed 1.2% against the dollar and 0.5% against the euro following Boris Johnson’s announcement that non-essential retailers can open from June 15th. This also, obviously, was an enormous lift to the FTSE 250, the domestic-focused index bounding more than 530 points higher to hit 16900.

Source: SpreadEx