LGT Navigator: Low visibility and high uncertainty

Despite the massive aid measures taken by central banks and governments as well as the IMF, uncertainty in the financial markets remains high, particularly with regard to the duration of the pandemic and the measures that will be taken in response.

The duration of the global state of emergency will also have a significant impact on the extent of the economic damage. While investors in New York took advantage of lower entry levels and ensured a renewed recovery, the positive results and surprisingly good economic data from China failed to convince equity investors on Asian stock markets.

Recession fear

The latest economic data from China nourished hopes of an early economic recovery after the partial lifting of the state of emergency. The Chinese Purchasing Managers' Index (PMI) for the industrial sector rose to 52.0 in March from the previous month's record low of 35.7 against the backdrop of the pandemic, thus far exceeding analysts' expectations of 45.0. However, the PMI data is likely to be difficult to interpret at the moment, as the starting point for the survey was the virtual standstill of production. The Shanghai and Hong Kong stock market indices, however, welcomed the better-than-expected PMI survey data with moderate gains of up to +1%. In Tokyo, however, the Nikkei Index, which comprises 225 stocks, is trading at around -1%.

Hope for medical progress in the fight against COVID-19

On the New York Stock Exchange, the Dow Jones posted a daily gain of +3.2%. The broad-based S&P 500 rose by +3.4%, and the Nasdaq technology exchange by +3.6%. The background to the recovery on Wall Street was the hope for faster mass testing and extensive research for a vaccine. For example, the shares of the pharmaceutical company Abbott rose by +7% after the company received approval for a rapid corona test from the FDA in an emergency procedure until revoked. The shares of Johnson & Johnson also rose by around +6%, as the pharmaceutical company says it has made progress in the search for a vaccine against COVID-19.

Moderate relaxation in Italy and Spain, but Situation remains extremely tense

While in Italy the increase in new infections seems to be slowing down somewhat, the number of people infected with corona virus in Spain rose to over 85 000, which means that the spread of the virus is now also higher than in China. Some 12 300 health workers are now also among those infected. Nevertheless, the number of new deaths in Spain has fallen slightly for the first time in a long while. So far, around 7 500 people have died of lung disease in Spain.

Economic sentiment in the euro zone collapses

The latest survey results from the European Commission show that economic sentiment in the euro zone fell more sharply in March than at any time since the survey was launched in 1985, with the Economic Sentiment Indicator (ESI), a broad-based indicator that measures sentiment in companies and private households, falling by 8.9 points to 94.5. However, economists had anticipated an even steeper slump to 91.6 points in view of the corona crisis. In addition, consumer confidence slumped more sharply than ever before as consumers' assessment of the economic situation deteriorated considerably due to the pandemic.

Ongoing debate on 'corona bonds'

While Germany, in particular, rejects the creation of joint bonds, ECB Vice-President Luis de Guindos has meanwhile spoken out in favour of the introduction of so-called 'corona bonds' in the fight against the extraordinary strain on national budgets due to the corona crisis. Italian Prime Minister Giuseppe Conte had recently been at the forefront of the fight for joint borrowing. EU Commission President Ursula von der Leyen and German Chancellor Angela Merkel, as well as Austria or the Netherlands, have so far rejected 'corona bonds'.

KOF economic barometer at five-year low

The leading indicator of the Swiss Institute for Economic Research (KOF) at ETH Zurich fell in March to 92.9 from 101.8 points in the previous month, its lowest level in five years. In view of the measures taken to contain the economic consequences of the pandemic, the outlook for the Swiss economy has thus become massively gloomier. According to the KOF, a further decline in the indicator to a level of 60 points is therefore to be expected. This is how low the barometer was last quoted during the recession following the 2008/09 financial crisis, and a severe recession must be expected. Meanwhile, the Swiss National Bank (SNB) is also fighting against the effects of the crisis. On the one hand, the SNB is making additional liquidity available to the commercial banks and, on the other hand, according to the latest data on sight deposits, the SNB is trying to curb the strength of the Swiss franc by intervening in the currency markets. In the week ending March 27, the growth in sight deposits of the banks with the SNB increased more than at any time since the Swiss franc shock at the beginning of 2015.

Economic Indicators March 31

MEZ	Country	Indicator	Last

03:00	CN	PMI Manufacturing	35.7

03:00	CN	PMI Non-Manufacturing	29.6

08:45	FR	Consumer Prices (y/y)	+1.6%

09:00	SP	GDP Q4 (q/q)	+0.5%

09:55	GE	Unemployment Rate	5.0%

11:00	EZ	Consumer Prices (y/y)	+1.2%

11:00	EZ	Core Consumer Prices (y/y)	+1.2%

11:00	IT	Consumer Prices (y/y)	+0.2%

Earnings Calendar April 14

Country	Corporate	Period

US	JPMorgan Chase	Q1

US	Johnson & Johnson 	Q1

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