04 / 20


The prospect of an easing of containment measures outside of China and additional monetary policy support helped the financial markets to recover in April. Equally encouraging were the declining infection figures. In the medical field, initial study results for the antiviral medication Remdesivir were also published, which were mixed, but were nevertheless positively received by the market. The head of the US National Institute of Allergy and Infectious Diseases evaluates the results very positively, whereas a Chinese study could not find a positive effect of the active substance. The economic data showed the expected deep traces of the lock-down in the month under review. In the past six weeks, a total of 30 million people in the USA have submitted initial applications for unemployment benefits and the US economy contracted by almost 5% in the first quarter. Such a sharp decline was last seen in the major financial crisis of 2008/2009. This is only a harbinger of the forthcoming and much worse to be expected second quarter. The price of WTI oil was temporarily trading at a negative price of almost -$40 in mid-April due to massive oversupply. Limited storage capacities meant that the players were prepared to pay money to close their open oil futures contracts in order to prevent delivery. This has never happened before in history. We interpreted this sell-off as a capitulation and expect a continuous adjustment of the supply side in the long term due to the current low price. Demand should also increase as the global economy gradually returns to normal.

Equity markets

After the rapid, waterfall-like sell-off in March, a strong recovery of the world markets set in this month. The SMI gained 3.4%, the EuroStoxx50 rose 5.1% and the US Dow Jones Index closed above the psychological 24,000 mark. Surveys show that despite the rise in April, investors remain very sceptical about equities. Positioning data such as the ratio of PUT to CALL options still imply a somewhat nervous investor community. Pessimistic survey results are often a breeding ground for further price increases. Due to low expectations for the earnings season, many companies have so far been able to report better figures, although the outlook remains uncertain. The expectations for the technology sector are not quite as low. Despite the gloomy outlook, earnings for technology stocks (especially software) are likely to grow in this quarter, making the technology sector one of the few sectors with positive earnings expectations (see FOCUS).

Interest rates

Interest rates remained at low levels. In the USA, the interest rate for 10-year government debt is practically at an all-time low of 0.58%. In Europe, despite negative interest rates, the record levels are still a long way off. The 10-year Swiss Government bond yields a negative 0.52%, which is no comparison with the extreme value of -1.1%. Yield premiums on corporate bonds fell sharply. The US Federal Reserve extended its bond purchase program to the junk bond segment. A further USD 2.3 trillion are to be made available to provide liquidity to support so-called "fallen angels", i.e. companies that have recently lost their investment grade rating. The balance sheet of the US Federal Reserve has risen to a new record level of USD 6.57 trillion.

Currencies / Commodities

The record distortions on the oil market were unprecedented. In this still young year, the oil price already lost more than 71% before a strong recovery set in. In April, oil states agreed on a massive cut in production of almost 10 million barrels per day. Norway also announced a cutback in production at the end of the month. Cyclically sensitive metals are also weak (copper -15%, aluminium -17%, steel -7.6%). The price of gold, on the other hand, rose by over 11%. The EUR was slightly weaker against the CHF and the USD slightly stronger.


The strong market recovery is based on the hope that the economic standstill will soon be over. It can be assumed that the states will adhere to the announced gradual easing of the containment measures and that the economy should therefore recover again. The assessments imply that this recovery scenario is partially anticipated, which seems legitimate to us. However, economic data will be able to reflect this from the third quarter onward at the earliest, and until then markets may be more vulnerable and volatile in reaction to the forthcoming negative economic data. It is important that the process of "reopening" the economy is not unnecessarily delayed or burdened by large corporate bankruptcies. In the best case, the normalization process will be accompanied by success in the medical field. However, a second wave of infection must be prevented, otherwise the pandemic containment progress achieved in the meantime would quickly be cancelled out again. 


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