Market Review

Global Markets Weekly Update

Review the performance of global stock and bond markets over the past week, along with relevant insights from T. Rowe Price economists and investment professionals.



Stocks surge on signs of slowdown in coronavirus infections

Stocks recorded one of their best weekly gains on record, as some encouraging trends in global coronavirus infection and hospitalization rates lifted hopes that stay-at-home orders might soon be eased. The most beaten-down asset classes fared best, with small-caps outperforming large-caps and slower-growing value shares outpacing higher-valuation growth stocks. The same was true among sectors of the S&P 500 Index, with energy shares and financial services shares regaining some lost ground, while consumer staples stocks lagged. The gains brought the large-cap indexes and the technology-heavy Nasdaq Composite Index within 20% of their February highs—or out of bear market territory, according to some definitions. U.S. markets were closed Friday in observation of the Good Friday holiday.

Markets got off to a strong start for the week, with T. Rowe Price traders attributing the turn in sentiment to an easing toll of new coronavirus infections and fatalities in several global hot spots, including Italy, France, Germany, Spain, and New York City. Markets carried that momentum into Tuesday morning, after China reported no coronavirus-related deaths for the first time, while Germany was seeing more recoveries than new cases and Italy stated it will end portions of its lockdown on May 4. New York reported a new spike in deaths on Tuesday and Wednesday, but investors appeared encouraged that new hospitalizations continued to slow. The University of Washington’s widely watched model predicting the course of the outbreak also significantly lowered the expected number of fatalities in the U.S.

Fed announces massive new loan program, while additional fiscal stimulus is under discussion

Hopes for further stimulus measures to combat the economic slowdown also seemed to support sentiment. On Tuesday, House Speaker Nancy Pelosi was quoted as telling members of her party that the next phase of fiscal stimulus would include another $1 trillion in support to the economy, including direct payments to individuals, extended unemployment insurance, and new small business loans. At a press conference early in the week, President Donald Trump stated that another round of stimulus was “absolutely under serious consideration,” and talks between the administration and congressional leaders were reportedly underway.

On Thursday morning, the Federal Reserve announced an even larger stimulus program, promising $2.3 trillion in loans to smaller businesses and municipalities. The Fed also announced it would allow investment in lower-quality debt as part of its Term Asset-Backed Securities Lending Facility and other emergency lending programs. (For a view from one our multi-asset analysts on how the Fed’s previous actions have already incrementally eased credit conditions, click here.)

Over 10% of workers have lost jobs

The week’s economic news appeared to justify the Fed’s aggressive action. On Thursday, the Labor Department reported that 6.6 million Americans had filed for unemployment benefits in the previous week, only slightly lower than the record-setting number in the previous report and well above consensus estimates. As an illustration of the unprecedented contraction in the labor market, the 17 million jobs lost since mid-March totaled over 10% of the U.S. workforce. Relatedly, the University of Michigan’s consumer sentiment index’s preliminary reading for April recorded its largest drop on record, bringing it back to levels last seen in 2011.

Encouraging stability in fixed income markets

U.S. Treasury yields increased over the week, driven by the risk-on sentiment in equity markets and an increased supply of Treasuries. (Bond prices and yields move in opposite directions.) In a reassuring signal for government debt markets, however, T. Rowe Price traders noted that solid demand for Treasury bills largely offset massive levels of issuance. The broad municipal market also sent positive signals, supported in part by the Fed’s new liquidity facility to provide up to $500 billion in funding to qualifying state and local governments through purchases of short-term notes. As strains within the muni market eased, the firm’s traders reported solid demand for several new deals as primary market issuance slowly reopened.

The growing hopes for nearing a peak in the coronavirus pandemic led to improved sentiment in the investment-grade corporate bond market. T. Rowe Price traders reported that overseas investors were active during the week, and a steady flow of new deals came to market. Meanwhile, equity gains supported the high yield bond market, where demand outstripped the new issuance volume. Energy bonds traded higher midweek amid reports that OPEC and other oil-producing nations would discuss production cuts at a Thursday meeting (see Saudi Arabia section below).

U.S. Stocks1
Index Thursday's Close Week's Change % Change YTD





S&P 500




Nasdaq Composite




S&P MidCap 400




Russell 2000




This chart is for illustrative purposes only and does not represent the performance of any specific security. Past performance cannot guarantee future results.
Source of data: Reuters, obtained through Yahoo! Finance and Bloomberg. Closing data as of 4 p.m. ET. The Dow Jones Industrial Average, the Standard & Poor’s 500 Stock Index of blue chip stocks, the Standard & Poor’s MidCap 400 Index, and the Russell 2000 Index are unmanaged indexes representing various segments of the U.S. equity markets by market capitalization. The Nasdaq Composite is an unmanaged index representing the companies traded on the Nasdaq stock exchange and the National Market System. Frank Russell Company (Russell) is the source and owner of the Russell index data contained or reflected in these materials and all trademarks and copyrights related thereto. Russell® is a registered trademark of Russell. Russell is not responsible for the formatting or configuration of these materials or for any inaccuracy in T. Rowe Price Associates’ presentation thereof.



Equities in Europe rose over the week, as the slowing deaths from the coronavirus raised hopes that country lockdowns may soon be eased. The STOXX Europe 600 Index ended 6.62% higher. Germany’s Xetra DAX Index climbed more than 11%, France’s CAC 40 Index gained 7.62%, and Italy’s FTSE MIB was up around 5%. The UK’s FTSE 100 Index surged 7.83%.

Coronavirus deaths slow, but new infections rise

Spain, France, Italy, and the UK said early in the week that new coronavirus deaths were beginning to decline. The number of patients in intensive care in Italy declined for the first time. European officials noted that there are tentative signs that strict lockdown measures are beginning to help slow the spread of the virus.

The Financial Times newspaper said governments across Europe have begun preparations to ease lockdowns when infection curves are under control. Denmark said that kindergartens and primary schools will reopen from April 15. The Czech Republic said shops selling some nonessential goods could reopen from Thursday. Austria said small shops, DIY stores, and garden centers would be able to open from April 14. Italian Prime Minister Giuseppe Conte told the BBC that some restrictions in Italy may gradually be removed by the end of April. However, concerns rose at the end of the week that the implementation of lockdown exit strategies may be delayed after data showed fresh infections were still rising in Germany, Italy, Spain, and the UK.

UK Prime Minister Boris Johnson remained in intensive care after his COVID-19 (the disease caused by the coronavirus) symptoms worsened. His condition was stable and improving, Culture Minister Oliver Dowden told BBC TV on Thursday. Foreign Secretary Dominic Raab, who is also First Secretary of State, is deputizing for Johnson.

Still no agreement on eurozone rescue package

Eurogroup finance ministers were set to resume their meeting on Thursday to try to agree on a package of measures to support economies struggling with the impact of the coronavirus pandemic. So far, they have failed to reach an overall agreement after 16 hours of talks. The Dutch, backed by Germany, are resisting the unconditional use of the European Stability Mechanism, while France and Italy insist on a temporary reserve fund, financed by joint bond issuance, to support fiscal policy in the most indebted countries. Germany has rejected this proposal.

Ahead of the resumption of talks, European Central Bank President Christine Lagarde said Europe needs to show greater solidarity and full alignment of fiscal and monetary policy as the best way to protect productive capacity and employment. She urged ministers not to get hung up on joint debt issuance, so-called coronabonds, adding that there are other forms of solidarity like mutualized spending from the shared budget or a reconstruction fund.

Germany: deep recession forecast in 2020, strong rebound in 2021

Germany's five leading economic institutes forecast in their spring report that gross domestic product (GDP) would shrink by over 4% this year. They said economic output was likely to have shrunk by 1.9% in the first quarter alone and predicted GDP would slump by almost 10% in the second quarter, the sharpest decline recorded since quarterly national accounts became available in 1970. The unemployment rate is forecast to jump to 5.9% this year, and short-time workers will swell to 2.5 million year over year. Measures taken to weather the crisis would lead to a record combined deficit of €159 billion. Gross debt is expected to rise to 70% of GDP in 2020. However, Germany is in a relatively good position to recover lost ground once the pandemic is over, and the economists forecast the economy could expand by 5.8% next year. However, the institutes also warned that there were significant downside risks to the forecast.


Stocks in Japan recovered nearly the entire prior week’s losses through the close on Thursday. The Nikkei 225 Stock Average advanced 1,526 points (8.5%) and closed at 19,345.77, down 18.2% for the year-to-date period. The large-cap TOPIX Index and the TOPIX Small Index also posted good gains for the week but have returned -17.7% and -22.0%, respectively, in 2020. The yen was modestly weaker for the week and traded in a range near ¥109 per U.S. dollar on Thursday.

Recession a near certainty

The latest Reuters poll of economists shows the Japanese economy is expected to endure recessionary conditions (typically defined as consecutive quarters of declining economic growth). The poll showed that economists forecast an economic contraction of 3.7% year over year in the first quarter of 2020, following an unexpectedly steep 7.1% decline in the fourth quarter, as the U.S.-China trade war and the October 1 consumption tax increase choked consumption and businesses slashed capital spending at the fastest pace since the global financial crisis in 2008.

The forecasters polled by Reuters believe that Japan’s economy will continue to slide at an annualized 6.1% rate in the current quarter. For the entire year, economic growth is expected to decline 2.1%. Prime Minister Shinzo Abe announced a massive stimulus effort totaling ¥108.2 trillion ($992 billion), a headline figure that is nearly 20% of the nation’s economic output. About 80% of the economists believe that the Bank of Japan's (BoJ) next move will be another easing of monetary policy (roughly 50% expect some form of action this month), in a follow-up to the BoJ's March easing of corporate funding, including asset purchases of corporate bonds and commercial paper, to reduce strains on markets impacted by the global pandemic.

State of emergency                                                                                                                                    On Tuesday, Japan’s prime minister declared a state of emergency for Tokyo and six other prefectures that will last a month. Abe has granted local authorities the power to urge people to stay at home in major cities, accounting for more than 40% of Japan’s population, to combat the spread of the coronavirus.  While key sectors, including tourism and manufacturing, will be severely hurt by the closures, Abe said the measures were necessary as Japan’s economy faced its worst crisis in the postwar era.


Markets were closed for the Ching Ming holiday on Monday. Taking their cue from the rally in global markets on better coronavirus numbers, they opened higher on Tuesday. From the previous Friday to Thursday, the Shanghai Composite and CSI 300 large-cap index both rose by around 2.2%.

China ended its lockdown of Wuhan, the original epicenter of the coronavirus outbreak. Travel hubs were reportedly extremely busy after an 11-week lockdown as stranded Lunar New Year travelers and migrant workers were finally able to return home or to their place of work. Fear is still evident, as some traveled in full protective clothing. On the other hand, many Wuhan residents were reported to have visited popular local beauty spots, an encouraging sign that normal behavior may return quickly in the absence of a second wave of infections.

Smaller companies bearing the brunt of the coronavirus pain

Press reports pointed to a growing economic toll for China's small and mid-size enterprises (SMEs) arising from the coronavirus pandemic. According to a South China Morning Post report, more than 460,000 companies shut during the first quarter, including 26,000 in the export sector. Over half had operated for less than three years, according to Tianyancha, a commercial database. The same report said new company openings in the first quarter fell nearly 30% year over year, but at 3.3 million, these newcomers exceeded shutdowns by a large margin. Getting financial aid to SMEs in need is viewed by many as being one of the keys to a successful fiscal response. Ratings agency Moody's indicated the coronavirus is putting more strain on China's privately owned enterprises, the majority of which are smaller companies.

Reduced air travel threatens China's supply chains

Beijing's stringent international travel restrictions allow Chinese airlines just one flight per country per week. National flight capacity is down by about 90%, while Hong Kong's Cathay Pacific has cut 96% of flights. Press reports point out that this poses serious logistics difficulties and threatens global supply chains. According to the International Air Travel Association, around 35% of global trade is by air, and around half of that travels in the holds of regular passenger flights, especially items such as high-value electronic components. One result of the elimination of passenger flight cargo capacity is that air freight rates have soared by 200% on average to Asian destinations and by over 100% to the U.S. and Europe.

With showrooms closed during the lockdown, domestic car sales in China fell by over 60% in January and February. This was enough to cause global auto sales to plunge 17% in February, the biggest annual decline since 2008. To help support the domestic auto market, Beijing announced that subsidies for new energy vehicles—due to end this year—will be extended to 2022.

China's property sector shows surprising signs of life

The latest monthly survey of China's residential property market published by China Realty Research was surprisingly upbeat. Tier 1 and tier 2 city residential sales in March declined 30% to 40% year on year, but this was much better than February's fall of around 70%. By the end of March, 95% of real estate sales offices had reopened, strong evidence that China is rapidly returning to normal. 

Other Key Markets

Gifford: Mexico facing hard landing

Mexican stocks, as measured by the IPC Index, returned about 4.5% through the close of business on Wednesday. (The market was closed on Thursday and Friday.) Although the equity market rose, investors may have been disappointed by a recent speech from President Andres Manuel Lopez Obrador (AMLO). According to T. Rowe Price emerging markets sovereign analyst Aaron Gifford, AMLO’s speech was expected to be about an economic rescue plan, but it turned out to be a “doubling down” on his populist agenda. This includes a continuation of pet projects and social handouts but no targeted support for the private sector.

With the health crisis, policy uncertainty, and the lack of countercyclical stimulus, Gifford believes Mexico’s economy could face a “hard landing.” Consensus estimates for GDP growth are now at -5% for this year but are likely to be revised down further in the coming weeks. Gifford believes a more credible stimulus plan needs to be put forward, including for the heavily indebted, state-owned oil company PEMEX.

Saudi shares rise as investors await oil production deal

Saudi stocks, as measured by the Tadawul All Share Index, returned about 3.8% in the five trading sessions since the close of business on Thursday, April 2. The market is closed on Fridays and Saturdays. Although an expected conference call among oil-producing nations was delayed from Monday until Thursday, equities extended last week’s gains as investors were optimistic that OPEC and non-OPEC countries would reach an agreement on cutting global production. According to CNBC, the meeting was expected to start at 4 p.m. (local time) in Vienna, Austria.

Early in the week, there were conflicting reports about the likelihood of renewed cooperation between OPEC heavyweight Saudi Arabia and non-OPEC member Russia. Some media reports indicated that there was continued tension between the two countries following Russia’s early-March decision not to cooperate with proposed OPEC production cuts and Saudi Arabia’s retaliatory move to drive down prices via increased production and discounts to global customers. Other reports quoted a Russian official as saying he believes that a Saudi-Russia deal to cut global production was “very close.”

The likelihood of a deal seemed to increase around midweek, as Russia signaled a willingness to cut production. There were also reports in early Thursday trading in the U.S. that a Saudi-Russia deal was taking shape, and The Wall Street Journal reported shortly before markets closed in New York that the two nations had agreed to cut production by a combined total of 5.3 million barrels a day, nearly a quarter of their current combined output.

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