Key points This Week

Trump Pulls WHO Funding

The controversy surrounding Donald Trump’s presidency went up another gear this week as Trump announced that he was pulling US funding for the WHO. Following the WHO criticising Trump over his initial handling of the outbreak in the US, accusing Trump of wasting time and not taking the outbreak seriously enough to begin with, trump reacted aggressively. Accusing the WHO of being involved in a cover-up with China, Trump said that the US government would no longer be providing funding for the organisation.

BOC Extends Asset Purchases

The BOC announced extensions to its recently announced QE program this week. The only bank of the G7 not to use QE in response to the GFC, the BOC was forced to finally employ such measures last month. The BOC has now announced extensions to the assets as well as the size available for purchase, signalling room to do more if necessary.

UK Extends Lock-down

In response to the deepening crisis in the UK, the government announced that the lock-down there will be extended for at least another three weeks. The UK has already seen the single highest daily death toll in Europe and authorities are still not sure whether the UK has peaked or not yet lead, leading to another review of the lock-down on May 7th.

Chinese GDP Falls

Following Chinese GDP sinking to 30-year lows of 6% in Q4 of 2019, Q1 2020 GDP was seen falling to its lowest recorded reading of -6.8% as a result of the COVID-19 outbreak there. The reading, which was worse than the -6.2% figure forecast, marks the first ever contraction in Chinese growth and now raises serious concerns over the prospect of a full recovery in Q2.

Key Events Next Week

US, UK & European Manufacturing Data

The market will receive the next round of factory data for the three economies next week and investors will be keen to see if there has been any improvement whatsoever or if the sharp downturn seen in the last set has continued. With lock-downs in place across the US, UK and Europe, further weakness is expected, which will likely put further pressure on central banks.

Keep An Eye On

The US “Reopening”

President Trump announced this week his plans for states to begin reopening. Following much controversy over his initial claims that the decision to reopen rested solely with him, Trump has now confirmed that individual states will have the autonomy to decide when to reopen and has unveiled a three-phase plan for reopening. However, the plans have been criticised as vague. It is not clear yet how quickly states will be keen to reopen given that the death toll is still elevated there and the potential for a re-escalation of the virus there poses downside risks for asset markets.

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