30-4-2020 10:14:0630-4-2020 10:09:27Markets in Asia have rebounded strongly today after President Trump said that he would look to implement a range of fiscal measures to help cushion the effects of a rise in cases of COVID-19 in the US.
These measures are said to include some payroll tax cuts as well as an expansion of paid sick leave to cover vulnerable workers, who are self-isolating. These measures were dismissed at the end of last week, by President Trump’s chief economic advisor Larry Kudlow however they now appear to be coming back into consideration. It’s amazing what a 2,000 point fall in the Dow can do in an election year.
The rebound has also been helped by signs that China is getting the spread of the virus under control, authorities reported the lowest number of new cases since mid-January, while President Xi also made a surprise visit to Wuhan in a sign that Chinese authorities are confident they have the virus under control. This is significant as it is unlikely that President Xi would put himself in harm’s way.
This optimism along with expectations around further central bank actions is, for now, offsetting the news that the whole of Italy has gone into lockdown and the Spanish government has taken the decision to close all schools and universities in Madrid.
The larger question is not only whether today’s rebound can stick, but whether policymakers can deliver, on that the jury remains out.
Today’s early movers have been oil companies and banks, both sectors amongst the bigger fallers yesterday, as oil prices and yields rebound.
The rebound in oil prices is helping with early gains for BP and Royal Dutch Shell, however the gains need to be tempered against the huge declines we saw yesterday, while a recovery in yields is aiding a recovery in the banking sector, with modest gains for Lloyds Banking Group, Standard Chartered and HSBC.
In light of the recent turmoil in markets this morning’s full year numbers from Standard Life Aberdeen look fairly illuminating. The first half of the financial year was a bit of a disappointment with the shares dropping sharply after profits came in £31m lower than the year before, at £280m and below market expectations.
This slowdown wasn’t helped by significantly higher net outflows in the first half. Management were optimistic that the synergies being created from the Aberdeen Asset Management deal would achieve all of the £350m of cost savings promised. The second half of the year looks to have been better with assets under management rising by 3.1%, however adjusted profits before tax were still down from last year by 10% to £584m.
Fee based revenues were also lower at £1.63bn, down from £1.87bn, however full year gross inflows rose to £86.2bn.
While all of this comes across as reasonably positive these numbers won’t reflect the recent volatility that we’ve seen in the past few weeks, and management appear to have acknowledged this by warning that 2020 was likely to be a turbulent one, and that their main focus for the company going forward was going to focused on what they can control, namely clients, costs and shareholders.
US markets look set to take their cues from the positive sessions in Asia and the US with a similarly positive open, though the gains are still likely to fall well short of yesterday’s losses.
On the earnings front it’s been a decent year so far for Dicks Sporting Goods. In Q3 the company reported its best sales quarter in 6 years, reporting earnings of $0.52c a share on sales of $2bn, beating expectations by a fairly decent margin. The gains were largely driven by the e-commerce side of the business, which rose 13% driven by clothing and footwear sales. In so doing the company hiked its full year results expectations with the US consumer still looking strong. The company now expects to see $3.50c to $3.60c a share for the full year, with an expectation that sales will rise by 3% year on year.
With US retailers and the US consumer looking fairly healthy up to now, the US administration will be keen to maintain this confidence at a time when US cases of coronavirus could well rise further, and potentially knock consumer confidence and spending.
Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.