Daily summary: Bears return to global equity markets

•  Global economy will shrink the most since World War II according to World Bank
• Spike in the number of new COVID-19 cases worldwide
• Dow breaks 7-day winning streak, Nasdaq at record highs

European equities finished today's session in red, after recent trade figures from both Germany and France showed exports and imports plunged in April due to the coronavirus pandemic. Also recent spike in the number of new coronavirus cases worldwide weighed on investors moods. The situation in Europe is improving, however US and Latin America  are still recording high number of new infections. After WHO warned that the pandemic was "far from over", some people believe that now we are dealing with a second wave of infections. DAX 30 fell 1.6%, CAC 40 lost 1.6 % and FTSE 100 finished 2.1 % lower.

US indices trade in mixed moods. The National Bureau of Economic Research considered the official arbiter of domestic recessions, announced the US economy entered recession in February, ending its longest expansion in history. During today’s session Dow Jones dropped over 200 points, the first decline in seven days and S&P 500 lost more than 20 points, while the tech-heavy Nasdaq hit a record high for the third straight session as both Amazon and Apple jumped to their new all-time highs.

 

Today  Fed  will start its regular meeting, and the release of macroeconomic forecasts is scheduled for Wednesday. Due to emergency meetings, the Fed did not publish forecasts in March, so tomorrow's publications may prove to be very interesting. The Fed is also implementing a new program consisting of direct loans to companies with deferred interest payments and principal repayments. With a record balance of over $ 7 trillion and positive macroeconomic data, Fed may adopt a "wait and see" attitude. This may not necessarily appeal to investors who ignore bad information and are only looking for good news. If there is a lack of positive information, then the markets may run out of fuel needed to continue the recent rally.

Gold rose for a second straight day as equities tumbled and the World Bank projected a dire outlook for the global economy this year. The World Bank said the global economy this year will contract the most since World War II and emerging nations’ output will shrink for the first time in at least six decades due to the Covid-19 pandemic. Gold futures rose over 1.1%, while silver fell 0.40 % and platinum was trading flat.

 

A lot is on the agenda tomorrow. FOMC Economic Projections and Press Conference are undoubtedly the most important and may have major impact on the markets. However, regular data also should be watched closely as EIA Crude Oil Inventories report and  CPI figures from the US.