Monthly Summary
April 2020
Markets had another turbulent month as the corona virus remained front and center and economic data in April better illustrated its effect on global growth. Metals performed well, fueled by surging equities which had their best month in decades. Gold rose 6.2% to finish the month in the mid-$1680’s and silver jumped 5.8%, closing around $14.90. Platinum soared 13.2% and palladium fell 13.1%
The month began with a relatively mild rise in unemployment given the scope of this pandemic. Just over 700,000 jobs were lost in March and unemployment jumped to 4.4%. These numbers weren’t indicative of March as a whole, however, since most of the data was from before the country went into lock down, next month’s unemployment data will likely be one of the worst—if not the worst—on record.
Oil prices illustrated how much the global economy has collapsed over the past two months. With a sudden and drastic drop in demand coupled with limited storage capacity and an ensuing price war between Russia and Saudi Arabia, WTI crude prices turned negative in April as investors scrambled to sell out of their May contracts before expiration.
Stocks had their best month since 1987 with the Dow and S&P 500 rising 11.1% and 12.7% respectively. The Nasdaq performed even better, rising 15.4% and coming within 1% of turning positive for the year. Positive data suggesting an overall slowing of COVID-19 globally combined with substantial APAC market recovery gave investors great confidence to dive headfirst back into equities, regardless of ongoing catastrophic economic data.
The continued success of markets going into May, is directly tied to corona virus news. Optimism and FOMO were apparent in April; however, March showed us how quickly things can unravel, and a second wave or delayed vaccine could be detrimental to an already suffering global economy. Metals are poised to continue their success into May, either as a haven in a worsening economy or as a hedge in growing one.
May 22, 2020
Stocks are down slightly after mixed economic data leaves investors looking for guidance. Home sales dropped to a 10-year low and new jobless claims rose by 2.44 million, which was slightly worse than expected. Manufacturing data released showed a slight improvement in the economy with IHS Markit PMI rising to 36.4. Likewise, the Philly Fed manufacturing index rose from -56.6 in April to -43.1. Although less than expected, the rise does signal that April was likely the worst month of this decline. Gold is trading at $1,720, down nearly 2% so far this week as stocks continue to entice investors amid falling bond yields and hope that the worst of this pandemic is behind us.