Stock markets subdued last Friday after several days long rally. Investors are slowly moving from the risk-off futures. According to John Higgins, the Chief Markets Economist for Capital Economics, the analysts forecast further gains in the riskiest assets between now and the end of 2021. They also expect economic activity to start recovery in the second half of 2020. Afterwards, a continuation of massive monetary and fiscal policy support should follow that.
Higgins thinks that while the success in containing the virus might reverse as economies reopen, the rally will probably continue. He also stated that risky assets have already recovered quite a lot of the ground that they lost after the outbreak of the virus.
U.S. stocks fell on Friday. What caused their decline?
U.S. futures tumbled down on Friday morning due to the latest data on corporate earnings. It suggests a grim outlook for the current quarter. Earnings results for major U.S. companies were mixed after the market close on Thursday. Apple’s quarterly revenue was almost flat over last year, and the company declined to offer an outlook due to uncertainty over the pandemic.
Meanwhile, the S&P 500 ended the regular session lower on Thursday. The stock showed its best monthly gain since 1987 in April. Its index soared by 12.68% over the month. Despite that, the S&P 500 fell by 14% from its record high on February 19 and is down almost 10% year to date.
While Amazon’s first-quarter sales also skyrocketed by 26% during the last year, the company announced that $4 billion in expected coronavirus-related costs could lower operating income by approximately $1.5 billion.
Bad earning data wasn’t the only reason for the stocks’ decline. President Donald Trump threatened retaliation on China over the pandemic on Thursday, causing more concern. He has criticized China over its handling of the outbreak. Trump claims that he had seen evidence that the virus was started in a Wuhan lab. However, other U.S. officials have downplayed that claim.
