Global Markets Newsletter – May 2020

The Global Economy is recovering gradually from the Corona Virus Crisis with many exceptions and problems. There are strong signs that the world economy will diminish by 4.5%. However May was a recovery month for the markets in the US and not only. Markets reacted positively due to the li-quidity measures announced in April from the FED. On the other hand, macro-economic indices showed that crisis is more than present. GDP shrank by 4.8% from 4.4% (quarterly) and infla-tion was negative in April at -0.8% with a change in non-farm payrolls at 20.5mln.

In Europe, markets reacted accordingly but mac-ros were also disappointing. GDP shrank by 3.2% (yearly) and 3.8% (quarterly). Industrial produc-tion fell from -0.1% to -11.3%. The European Committee suggested a financial aid plan under terms of €750bln for all countries that their econ-omies were hit by the coronavirus-crisis. Many industries face survival issues if they do not receive state aid. Car industries and airlines are among them. Retail sales have dropped dramatically but with the re-opening of stores, malls and restau-rants in many countries, recovery is more likely than worsening of the situation especially until next fall.

China showed some signs of recovery as export data concerning April grew by 3.5% versus -6.6% and its inflation was in 4.3% from 3.3%. GDP however shrank by 6.8% and retail sales also fell by 15.8% (from -7.5%).

In Greece, the stock market traded between 600-650 units with low volumes. Market expects de-tails of the €32bln financial aid from the Europe-an Committee. The benchmark 10-year govern-ment bond yield closed at 1.56%.

The EUR/USD closed in May just above 1.11 in favour of the euro not only because the virus in US is still at an upscale danger but also due to the ear-lier re-opening of the stores in the Euroland.

The US equities are preferred versus European, (0 positions. US equities hold 70% of the total portfo-lio, of which the technological sector: 60%. Cash remains crucial as corrections are buying oppor-tunities often.

S&P-500 (year-to-date)
Dax-30 (year-to-date)
EUR/USD  (year-to-date)

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