Global Markets Newsletter – April 2020

The Global Economy is in the vortex of the Corona Virus Crisis. Containing and preventing the spread of Covid 19 worldwide continue to add significant uncertainty to its function. A host of crucial and challenging questions for its duration characterize an emerging new environment on the social and economic front. The US kept on the path on im-plementing the unprecedented measures to stimu-late the economy. New York remains the epidemic center of the US. US Treasury Secretary Steven Mnuchin stated that the US economy is expected to reopen in May and June, with a strong recovery in production in the 3rd and 4th quarters.

In Europe, ECB decided at the last meeting of April to lend money at a negative rate, in an effort to further support commercial banks in order to facilitate and encourage them to lend money to businesses, essentially paying them in order to borrow. Markets acted accordingly as there was a small buying interest. However measures from the euro-group did not satisfy the euro-group leaders, with the French president Macron declaring fears for an imminent breakup of EU.

Oil had an unprecedented drop in its price of April contracts one day before their expiration on nega-tive levels. The drop is due to the inability to store large quantities produced and not consumed due to low demand. The oil market has returned to some extent, but volatility remains high and de-mand low. In terms of supply, Arabs and Russians have not agreed to reduce production, with Saudi Arabia continuing production and supply, with the result that pressure on prices remains.

In Greece, the stock market traded just over 600 units with low volumes. A positive move was the new 7-year government bond issue which was covered 3 times with a yield to maturity at 2.02%. The benchmark 10-year government bond yield closed at 2.16%.

The EUR/USD moved in parallel prices after its rebound closing at the same levels as in March (1.0850). Dollar is expected to strengthen mostly because EU seems to take less measures versus the US and not supporting efficiently the various economies. Our preference remains the american equities versus european stocks where we hold no position. US equities hold 70% of the total portfo-lio which the technological sector holding 60%. Cash remains crucial as corrections are buying opportunities often.

S&P-500 (year-to-date)
Oil – CL1 (year-to-date)
EUR/USD  (year-to-date)

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