Week ahead: Forthcoming global PMIs to reveal pandemic impact

Risk sentiment improved at the end of the past week and world stocks closed higher for the second week in a row. It seems like investors decided to ignore the raft of gloomy data and corporate earnings released over the week and focus on positive developments. They were optimistic about the results of a drug trial and President Donald Trump's plan to reopen the economy. Reports on Thursday night detailed encouraging partial data from trials of the U.S. company's experimental drug remdesivir in severe COVID-19 patients. A University of Chicago hospital participating in a study of the antiviral medication said it is seeing rapid recoveries in fever and respiratory symptoms, with nearly all patients discharged in less than a week. And on the same day, President Trump outlined a three-step plan for states across the US to gradually ease lock-down restrictions in phases if they meet the set criteria, meaning some states could begin immediately relaxing the social distancing measures.

The mood was also bullish in Europe, where virus numbers continues to improve, and some local authorities like Spain and Italy already started easing some of the restrictions.

Risk sentiments will remain vulnerable to any virus headlines in the coming weeks. And the question now is: will risk appetite remain elevated when a raft of crucial economic data due for release this week further highlight the economic damage caused by the pandemic, and when another set of gloomy earning reports is published?

On the earning front, highlights for this week include: Coca-Cola (KO), Netflix (NFLX), JetBlue Airways (JBLU), Delta Air Lines (DAL), Alcoa (AA), AT&T (T), Baker Hughes (BKR), American Airlines (AAL), American Express (AXP), AutoNation (AN). And though they are expected to be bad, Investors may give more weight to the words of company executives than headline-grabbing numbers, as Wall Street seeks evidence that corporations can weather the uncertainty caused by the coronavirus pandemic.

On the data front, a set of PMIs due for release this week form UK Europe and the US will provide a reality check of the pandemic impact on the relevant economies. The German ZEW Economic Sentiment due for release on Tuesday will attract attention, as well as the German Ifo Business Climate Index on Friday.

Beside the Flash manufacturing PMI due on Thursday, there is a bundle of key economic data due to be released from the US this week. Existing Home Sales on Tuesday, New Home Sales on Thursday, Core Durable Goods Orders on Friday. And most importantly the Initial Jobless Claims on Thursday, which was closely watched in the past few weeks. Forecasts suggest that another 5 million Americans filed for unemployment benefits last week, after a staggering 22 million Americans have filed for unemployment benefits in the last four weeks. And another disappointing set of jobless data could can dent risk sentiments.

In brief, this weeks’ economic highlights:

Monday, April 20, 2020:

• PBoC Loan Prime Rate (01:30 GMT)

Tuesday, April 21, 2020:

• UK Average Earnings Index +Bonus (Feb) (06:00 GMT)
• UK Claimant Count Change (Mar) (06:00 GMT) 
• German ZEW Economic Sentiment (Apr)               (09:00 GMT)
• Canadian Core Retail Sales (MoM) (Feb) (12:30 GMT)
• US Existing Home Sales (Mar) (14:00 GMT)          

Wednesday, April 22, 2020:

• UK CPI (YoY) (Mar) (06:00 GMT)
• Canadian Core CPI (MoM) (Mar) (12:30 GMT)
• Crude Oil Inventories (14:30 GMT)

Thursday, April 23, 2020:

• UK Retail Sales (MoM) (Mar) (06:00 GMT)           
• German Manufacturing PMI (Apr) (07:30 GMT)
• UK Composite PMI (08:30 GMT)
• UK Manufacturing PMI (08:30 GMT)
• UK Services PMI (08:30 GMT)
• US Initial Jobless Claims (12:30 GMT)
• US Flash Manufacturing PMI (01:45 GMT)
• US New Home Sales (Mar) (14:00 GMT)

Friday, April 24, 2020:

• UK Retail Sales (MoM) (Mar) (06:00 GMT)
• German Ifo Business Climate Index (Apr) (08:00 GMT) 
• US Core Durable Goods Orders (MoM) (Mar) (12:30 GMT)