In the second half of May, investors may look with great attention at the next macroeconomic data coming from individual economies. The policy of reducing restrictions in individual countries and the behaviour of several key markets, including oil and stocks in the USA, may also be crucial.
Data from the United States published on Friday, 15 May do not inspire optimism about the state of the economy in the second quarter. Retail sales in the US fell by 16.4% compared to March. This was the biggest drop in retail sales in the history of measurement. These data may clearly indicate that the second quarter could be much worse than the first. The biggest drops were noted in clothing and accessories (-78.8%), electronics and appliances (-60.6%) and furniture (-58.7%). Sales at petrol stations fell by 28.8%. Excluding cars, petrol, building materials and catering services, retail sales fell by 15.3%. Compared to the previous year, retail sales fell by 21.6%, a record fall.
Next week, investors in the United States may again expect unemployment benefit claims to turn out higher than expected. However, with the reopening of the economy, there might be a growing chance that they could fall to 2.5 million. This is still a huge figure in the second half of May. Thus, the US economy may only start to recover in the third or fourth quarter - unless the second wave of illnesses occurs. From this perspective, the levels at which the US indices are located may still seem relatively high.
From Thursday, May 21, preliminary PMI's reports for May will be published. It may also depend on their value how investors interpret the situation on the markets. The market consensus indicates better results than in April. However, the question remains open whether all indices will increase in relation to the previous month and whether this increase will be significant.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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