Top Things to Know in the Market on Thursday, May 7th

• 2020-05-07
• Traiding Idea

EU economy will shrink by 7.5 % this year

According to the European Commission's disappointing forecast, the Coronavirus pandemic will plunge most European economies into their worst state since the Great Depression.

Brussels has had to abandon any hope of growth for both the European Union and the Eurozone and predicted that their economies would shrink by 7.5 % and 7.75 %, respectively.

This is the worst recession for the Eurozone. Compared to previous estimates, growth projections have fallen by almost 0.9%.

"Europe is experiencing an economic shock without precedent since the Great Depression," said Paolo Gentiloni, Europe's economic commissioner.

The U.S. private sector cuts 20.2 million jobs in April

U.S. payroll data company Automatic Data Processing (ADP) reported that while the Coronavirus continues to spread in the country, private companies have fired 20.2 million workers in April of 2020.

"Job losses of this scale are unprecedented. The total number of job losses for the month of April alone was more than double the total jobs lost during the Great Recession," Ahu Yildirmaz, head of the ADP Research Institute, said in a statement.

Economists at the Federal Reserve have previously said that with the new restrictions imposed to curb the spread of the coronavirus, the real unemployment rate will rise from 25.1 % to 34.6 % in April.

In the U.S. stock market, The Dow Jones Industrial Average slipped 0.91 % to 23,664.64.

The S&p 500 declined 0.71 %, to 2,848.42 while The Nasdaq composite advanced 0.51%, to 8,854.39.

Asian and European stock markets

In London, the FTSE 100 index jumped 0.07 % and closed at 5,853.76. French CAC 40 index fell 1.11% and closed at 4,433.38 points.

Also, Germany's DAX 30 index plummeted 1.15 % to 10,606.20 points. In Spain, the IBEX 35 index dropped 1.13% to 6,671.70.

In Asian stock markets, Japan's benchmark Nikkei 225 lost 0.01% and closed at 19,621.47. The Hang Seng in Hong Kong slid 0.76% to 23,954.46.

China's Shanghai Composite slipped 0.5% and ended at 3,916.44. In Australia, the S&P/ASX 200 index fell 0.58% to 5,353.50. Among other major Asian indices, TOPIX (Tokyo Stock Price Index) was down.

Oil market

Oil prices rose on Thursday after United States inventories grew less than expected, but market watchers predict that continued oversupply and low demand due to the coronavirus pandemic will prevent a further rise in oil prices.

Brent crude rose 12 cents, or 0.4 % to $ 29.84 a barrel today, after falling 4 % on Wednesday.

U.S. West Texas Intermediate ( WTI ) crude was up 19 cents, or 0.8% to $ 24.18 a barrel today, after falling more than 2 % in the previous session.

"The latest report (on U.S. inventories) added to tentative evidence that – after a catastrophic few weeks – the pressure on the U.S. oil market is beginning to lessen," Capital Economics said in a statement. "That said, we wouldn't rule out more turbulence in the coming weeks."

While oil prices have risen sharply since late April as some countries have eased restrictions, significant amounts of oil are still being stored, and there is still a deep gap between supply and demand. 

The U.S. Energy Information Administration said yesterday that U.S. crude oil inventories rose for the 15th week in a row last week, rising 4.6 million barrels.

That was lower than analysts expected growth of 7.8 million barrels.

Meanwhile, Iraq, OPEC's second-largest oil producer, has not yet informed its customers about restrictions on its oil exports, indicating that it does not fully comply with the OPEC+ reduction agreement.