Markets week ahead: Coronavirus spread will be in focus

Stocks had a bang-up week, with all indexes making sharp gains, shrugging off the spreading coronavirus outbreak that has resulted in renewed shutdowns of some economic activity and delays to some anticipated openings.
Equities ended the week higher by nearly 3% after the stock markets rose on Friday led by improvement in the Services Purchasing Managers’ Index (PMI).
The Services PMI which was released during trading hours showed a sharp rise in June at 33.7, against 12.6 in May. However, it still remained below the neutral mark of 50 for the fourth successive month, indicating another decline in service sector output.

Foreign portfolio investors (FPIs) have so far remained sellers in July pulling out $266.85 million worth of stocks in the last two trading sessions. According to the provisional data on the exchanges, FPIs sold stocks worth $74.34 million on Thursday. Domestic institutional investors bought stocks worth $121.34 million.
The markets could extend their gains as Q1 results will start coming out and that will make a difference. The difference between the ground reality and the markets is huge. The only reason for the surge in the market is sentiment and liquidity, there has been an increase in retail participation since the start of the lockdown and the SIP flows have remained constant.

Investors will continue to track Coronavirus spread and April-June corporate earnings release to gauge underlying trend.
In the week ahead, there are just a few data releases, including the US jobless claims Thursday. They will again be important, especially after continuing claims actually rose in the past week’s release by 59,000 to 19.3 million, despite the surge in rehiring, evident in the June employment report.
ISM nonmanufacturing data will be released Monday, and it will also get more than the usual attention.

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