Coronavirus and markets in the week 5/5 – 11/5/2020
The total number of coronavirus infections has already exceeded 4.3 million worldwide. The positive news is that the daily increase in newly infected cases is slowly declining. The reproduction number reaches a value of 0.93. A number below 1 means that the infection is declining. This allows national governments to continue to ease restrictive measures. At the same time, however, there is concern about a possible second wave of infection in the markets.
Fundamental analysis
A summary of the most significant events from last week is here:
- The total number of the coronavirus infections as at May 11, 2020, is more than 4,256,000 cases. The largest numbers are in the USA (1,385,000), Spain (268,000), the United Kingdom (223,000), Italy (219,000), France (177,000) and Germany (172,000). As the growth of new cases in these countries is slowing down, governments continue to cautiously ease restrictive measures.
- The situation in Russia continues to deteriorate sharply, where there are currently more than 221,000 cases (145,000 cases last week). Some emerging economies remain at risk, such as India, where there are currently 70,800 cases (46,000 last week).
- The US reported a further increase in claims for unemployment support. Last week, 3.2 million unemployed in the United States applied for support. In total, more than 33 million unemployed people have applied for support since March 19, 2020.
- Unemployment in the US in April climbed to 14.7%. 20,500,000 jobs were lost. The PMI in the services sector in the USA in April reached a record low value of 26.7 (in March it was 39.8).
- In Australia, data on retail sales came as a positive surprise, growing by 8.5% on a month-on-month basis in March (0.5% in February).
- German orders in production for March fell by - 15.6% (in February - 1.4%).
- The PMI for services in the euro area fell to 12 in April (previous month: 26.4).
- Retail sales in the euro area fell to -11.2% in March (0.6% in the previous month).
- PMI in Canada reached another record low of 22.8 in April (previous month: 26.0)
COT Report
Let's look at how large traders react to the situation and what is the market sentiment on selected instruments. The data is based on the COT report, which is presented regularly every Friday and shows the number of positions of large speculators in the futures markets in New York and Chicago. Traders use this information to decide whether to speculate on a decline or a strengthening of the instrument. A positive number means expectations of a strengthening of the instrument, while a negative number means a weakening.
Table 1: COT report – large trader's positions
| Instrument |
data as at
8.5.2020 |
data as at
1.5.2020 |
data as at
24.4.2020 |
data as at
17.4.2020 |
data as at
10.4.2020 |
Sentiment |
| Euro |
76 300 |
79 700 |
87 200 |
86 600 |
79 600 |
Bullish |
| Japanese yen |
27 200 |
32 300 |
26 000 |
22 600 |
22 400 |
Bullish |
| Australian dollar |
-33 500 |
-37 700 |
-34 800 |
-35 500 |
-35 400 |
Bearish |
| Canadian dollar |
-32 100 |
-29 000 |
-23 900 |
-23 800 |
-24 400 |
Bearish |
| USD index |
16 400 |
16 100 |
15 600 |
15 400 |
15 000 |
Strong bullish |