Stocks remained unchanged on Friday as market experienced a strong week of gains just on optimism of a potential coronavirus vaccine & the U.S. reopening its economy. S&P 500 rose 0.2% to close at 2,955.45 while Dow was down 0.1%, to close at 24,465.16 and Nasdaq outperformed, rising 0.4% to close at 9,324.59. Dow surged more than 900 points on Monday on positive news of vaccine as Moderna declared all 45 participants in its vaccine trial had developed coronavirus antibodies. “Reuters also reported on Friday, citing scientists leading the program, the U.S. is working on a effort involving more than 100,000 volunteers to test promising vaccine candidates.” But reeling from the coronavirus pandemic, once again tensions mounting between U.S.-China, Gold gained again on Friday, on fear of slow recovery in global economy. Spot gold climbed 0.6% to $1,735.43 per ounce, after falling 1.4% on Thursday, headed for a small weekly decline, U.S. gold futures also rose 0.8% to $1,736.20 per ounce. Treasury yields were too under pressure over the concerns on new instability in Hong Kong and increasing tensions between Washington and Beijing. On Friday 10-Yr Treasury Note hit a low of 0.627% its lowest level in a week. Even the yield on 30-Yr Treasury Bond was also moving lower at 1.3517%. Yields move inversely to prices, as lots of political tensions are developing, a possible confrontation between U.S. warships and Iranian freighters headed for Venezuela are key concerns heading into the long weekend, this tensions compounding with fears of slower global economic recovery, pressuring equity markets but supporting the U.S. dollar, also considered a safe haven. Most importantly on Friday, Beijing dropped its annual growth target for the first time. So, during the political & economic uncertainty will gold be the safest haven to hide??????
Oil too rallied in recent days on anticipation of economic re-opening, but prices dropped after geopolitical & economic declarations. US dollar climbed on Friday as the emergence of new tensions between the United States and China, boosted demand for safe-haven currencies and caused the euro, offshore yuan, and commodity currencies to fall. U.S. President Donald Trump has highlighted the positives of overseas demand for the greenback. As per news, the U.S. economy dropped 4.8% in the first quarter of 2020, according to early estimates by the Bureau of Economic Analysis. This decline is mainly due to a collapse in consumer spending. More darker, as economists expect the contraction for the second quarter of 2020 to be the largest since the years following the Second World War—annualized rates of -30% to -40% are currently the consensus. The Congressional Budget Office (CBO) projects a return to growth in the second half of the year but believes a return to pre-recession economic activity levels will wait until 2022 at the earliest.
Far more unique is the immediate depth of the economic shock, the wide range of possible viral paths (good and bad), the enormous rapid central-bank’s fiscal support sending trillions of dollars into the economy in a rush. Resulting the market keep on rising, as of now, the mega-cap growth and tech leadership that prevailed in the run up to the February peak have continued to outperform since. There have been only the most halting, marginal signs so far that more cyclical value and financial stocks might close the vast performance gap.
So, we call it, anything, this market has earned some respect for its resilience, but has lot more to prove as the environment ahead is completely uneven, to reach the stage from where most investors would consider a normal economy.