Markets week ahead: Tough challenges ahead

[12:50 PM, 5/2/2020] Avinash Sir: India’s benchmark indices, the Nifty and Sensex, posted their biggest monthly gains last week, benefiting from fresh bouts of buying in key stocks ahead of earnings release amid hopes of government roll out a stimulus package to help mitigate the damage from the health crisis.

Indices rallied about 14%, their biggest monthly gain since May 2009 after rebounding from a near 23% slump in March as the coronavirus hammered markets. The Sensex closed Thursday’s session 3% or about 1,000 points higher at 33,717 while Nifty settled 3.2% higher at 9,859. The Sensex is up about 31% from March 24 lows of of 25,638.
The coming week poses lot of challenges as fresh round of tariff war is expected to spark uncertainty in the global markets.

US President Donald Trump has ratcheted up anti-China rhetoric again. He is threatening trade tariffs to punish Beijing for its alleged failure to contain the coronavirus, even accusing a Chinese lab of manufacturing the pathogen.
With Chinese markets shuttered through May 5, the concerns showed up in offshore-traded yuan, which tumbled on Friday to a one-month low.

Speaking of economic damage from coronavirus, investors will get a stark piece of US data on Friday, when the Labor Department releases its employment report for April. Non-farm payrolls are expected to fall by 20 million for the month. That would be a steeper drop than the 701,000 decline in March, when an historic 113 straight months of employment growth ended.

More than 30 million Americans have sought unemployment benefits since March 21, while the economy contracted in the first quarter at its sharpest pace since the Great Recession around a decade ago.
COVID-19 is still here but many European countries are getting ready to test post-lockdown life.
Italian factories and building sites reopen from Monday after Europe’s longest lockdown. So do German schools, museums and churches, following the reopening of small shops, while Britain will lay out its exit strategy in coming days.

April trade and industrial output data will be watched in coming days for clues on how Q2 might shape up.
The Bank of England’s monetary policy report will be in focus on Thursday.

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