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Global stocks rise as investors cheer the easing of lockdown measures

April 27, 2020, 9:02 AM UTC

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Good morning. Stocks are rallying on the eve of a big earnings week. Oil, however, is a different story.

Let’s take a look at what’s moving markets.

Markets update


  • The major indices are trading higher, led by Japan’s Nikkei.
  • The Bank of Japan is pulling a page from the Fed and ECB in buying up all manners of corporate and sovereign debt. The yen jumped on the news.
  • Saudi Arabia said it’s begun to cut oil production a few days ahead of schedule. OPEC+ nations agreed earlier this month to a May 1 pull-back date, but Saudi Aramco got an early jump, reducing production to 8.5 million barrels per day from 12 million bpd, according to Bloomberg. Crude prices are still getting hammered.
  • Meanwhile, the mystery shrouding the health (and whereabouts) of North Korea’s Kim Jong Un deepens. Rattled last week, Seoul’s KOSPI is climbing on Monday.


  • European bourses are trading higher. The benchmark STOXX Europe 600 Index was up nearly 2% at the open.
  • To earnings now…Deutsche Bank and Bayer both announced quarterly profits. Adidas, however, said Q2 would be a rough one as 70% of its stores are still closed worldwide. Shares of all three were trading higher Monday morning.
  • It’s a big week for Lufthansa and Air France-KLM. The airlines are taxiing for government bailouts as air travel is down 90% across the Continent. Airbus, meanwhile, warned this morning it’s “bleeding cash at an unprecedented speed.”
  • Even with all that gloomy company news, investors are fairly content as lockdown measures continue to show signs of easing with coronavirus infection numbers improving.
  • Italy on Sunday announced a back-to-work schedule. First up: factories and building sites a week from today.
  • France is expected to open for business on May 11.


  • The Dow, S&P 500 and Nasdaq futures point to a positive open after Friday’s gains.
  • As in Europe, the optimism reflects the progress made in keeping the coronavirus infections at bay. According to an investor note from the German bank, Berenberg, the increase in confirmed U.S. infections rose 3.6% in the past 72 hours, down from 4.2%.
  • Goldman Sachs is eyeing the recent performance of the S&P 500, and doesn’t like what it sees. The recent rally is driven by a handful of large caps with particularly strong balance sheets; meanwhile, the median listed S&P firm is still down 28% from the February peak.


  • Gold and the dollar are down, a classic risk-off start to the week.
  • Crude is sinking again today. WTI futures fell below $15/barrel, and Brent, the global benchmark, is down 4% to $23.75.

The week ahead

Every week is a big week as we try to climb our way out of this economic crisis. But this week is particularly significant. This current three-week rally in equities has been driven primarily by a string of government stimulus measures, which has served as a pleasant distraction—some might call it a smoke screen—from the parade of corporate quarterly duds reported so far.

Attention could shift this week, however, back to Corporate America as we enter the busiest stretch of earnings season. More than one in three (34%) of the S&P 500 lineup is scheduled to report results this week, according to the Wall Street Journal. (Europe has a big week too with banks and automakers reporting.)

As we’ve noted here before, five firms—Microsoft, Apple, Amazon, Alphabet and Facebook—make up 20% of the S&P 500, by market cap. Each of those five report this week.

Most of the big banks have already reported, which gave us a telling look at the pandemic’s impact on the financial system, and, in turn Main Street. Next up are Big Tech, Berkshire Hathaway and credit card issuers. Combined, they’ll tell us how deep the damage will be to vital sectors of our economy in the quarters ahead.

As we’ve said before, the performance of these bellwethers will go a long way to determining just how far this equities rally can run.


We gathered around the TV last night to watch prime minister Giuseppe Conte address the nation. A few hours earlier, health officials had reported a steep drop-off in coronavirus deaths over the previous 24 hours, and so we were half-hoping the government would announce a bold plan for reopening the economy in the regions, like here in Rome, that have been largely spared the worst.

Silly us. Italian politicians don’t do bold. The back-to-work (forget back-to-school) measures will be phased in at a very gradual pace starting next Monday.

The level of micro-managing involved in the reopening is Italian bureaucracy at its worst. It’s so specific that Italians are bound to push the rules or ignore them outright. One that’s already being debated is funerals. They are permitted, but gatherings cannot exceed 15 people. How the Ministry of Mourning will manage that is anybody’s guess.

And, you can already see in Rome that businesses are jumping the gun. Bars are offering take-out cornetti and cappuccino before the permitted May 4 lifting of the ban. Meanwhile, policing the parks has been a hit-or-miss affair.

The lockdown fatigue is getting to everyone.

Here’s a rundown of the month ahead here.


Have a nice day, everyone. I’ll see you here tomorrow.

Bernhard Warner

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Today's reads

A higher calling

The Church of England is trying to save more than just souls. It’s become a force in the responsible investing movement—and it has major oil and gas companies in its sights, Fortune’s Katherine Dunn reports. The church’s holdings may be smaller than that of most activist investors, but, as Dunn notes, it “does have something that gets the attention of energy CEOs: influence.” And it’s used that standing to score some giant wins against Big Oil.

Pandemic Profiteering

The Federal Trade Commission has begun sending the equivalent of cease and desist letters to companies who push coronavirus products that purport to treat and/or prevent coronavirus infections. The FTC is concerned that a massive army of newly out-of-work Americans looking for an extra source of income will join the ranks of multi-level marketers pushing dubious products. As many as ten such firms have been hit with the warnings, the New York Times reports.

The cost of negative prices

Oil wasn’t the only thing that went negative last week. Belgian and German utilities saw electricity prices plunge to as much as negative €90 (-$97) per megawatt/hour. Cheaper-than-free is nothing new for the electricity sector, but these price falls are truly historic, the Wall Street Journal reports. It’s not some market quirk. Demand has crashed in recent weeks with factories and businesses shut down.

Market candy

Rock, paper, law suit

Justice can be cruel. Unless you’re Edmund Mark Hooper. Back in 2011, Hooper lost a best-of-three rock-paper-scissors duel, and was on the hook to pay the victor $500,000, Canada’s CBC reports. The Canadian man promptly appealed, and the matter landed in Quebec’s highest court. Late last week, the court ruled Hooper was not liable to pay the debt, essentially invalidating the wager. The reason: the classic hand game doesn’t require any skill whatsoever; it’s all chance, the court ruled. Such activities therefore aren’t a form of gambling, and the loser is not bound to honor the wager.

Btw, there is a supposedly fullproof way to win EVERY time—and not just against your 10-year-old child.