Markets this week | Calamatta Cuschieri

The vast majority of markets are closed today, being Easter Monday. It is anticipated to be a relatively quiet, shortened week, with the main focus being on the IMF and World Bank spring meetings, which will be taking place virtually over the week ahead and include a number of prominent speakers such as Federal Reserve Chair Powell.

Although the meetings will be taking place virtually, there’ll be a number of things to look out for, including the release of their latest economic forecasts in the World Economic Outlook on Tuesday. The event will also feature an array of speakers, including Fed Chair Powell, who’ll be taking part in a panel on the global economy, as well as US Treasury Secretary Yellen, and the special presidential envoy for climate, John Kerry.

The developments surrounding the Covid pandemic will remain in the spotlight over the coming week, as the case numbers have risen noticeably at the global level over the last month, with Europe in particular facing difficulties as it grapples with a third wave of the virus.

Numerous governments have put in place fresh restrictions in response, with France currently in a 4-week lockdown while Italy has extended restrictions through April. Outside of Europe there’s also been growing concern however, with exponentially rising cases in India, and the dire state of Brazil being a major concern, as the country battles with its own variant, and unhinged leadership.

News from central banks revolves around the focus on the minutes of recent meetings, with both the Fed and the ECB releasing their latest accounts. And on the data side, the services and composite PMIs from around the world will give a better picture of how the global economy fared through the end of Q1.

The flash readings we already have from March showed that services generally lagged manufacturing, with the Euro Area flash services PMI remaining at a contractionary 48.8, whilst the figure for Japan was also at a contractionary 48.3. Nevertheless, the UK and the US saw their services PMIs at much stronger levels, with readings of 56.8 and 60.0 respectively.

In furtherance to the chaos surrounding the collapse of Archegos Capital Management last week, which jolted select investment banks such as Nomura Securities and Credit Suisse Group, the latter announced today that re discussing replacing Chief Risk Officer Lara Warner while sparing Chief Executive Officer Thomas Gottstein as they tally losses that could reach into the billions.

The bank is set to give investors an update on the Archegos debacle, including the fate of top executives such as investment bank Chief Brian Chin this week. Collectively, the fallout across all stakeholders is expected to reach USD 10 billion according to JP Morgan analysts.

Speculation surrounding the re-opening trade in time for the crucial summer period remains topical, with the US in prime position to return to a sense of normality in near future, leading to airlines announcing ambitious plans to boost capacity by hiring scores of pilots. There is currently a stark contrast between the outlook for the US and Europe, bar the U.K. and possibly Malta, the difference mainly boiling down to the levels of population that have been vaccinated.

Disclaimer: This article was written by Simon Psaila, Investment Manager at Calamatta Cuschieri. The article is issued by Calamatta Cuschieri Investment Services Ltd, which is licensed to conduct investment services business under the Investments Services Act by the MFSA and is registered as a Tied Insurance Intermediary under the Insurance Distribution Act 2018.

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