What can we expect from the markets this week?

Last was indeed a special week for financial records. U.S. unemployment reached a record high, except perhaps for the Great Depression. However, the record was not broken by small margins, it was broken by more than 5 million. Essentially, 5 million more people applied for unemployment than at any other time in history. The previous record was between 600,000 and 675,000.

The U.S. markets then changed dramatically, as did gold, and the S&P 500 responded to volatility. However, as we enter the second week of the month, many people around the world believe that we are on the verge of reaching the peak of the virus situation. So what can we expect this week?

U.S. markets

In the United States, we saw the total number of infections reach 337,645, which is more than the 2nd and 3rd most infected nations (Italy and Spain) combined. Unfortunately, this high infection rate also resulted in the deaths of more than 6,100 people in the United States this weekend. However, while this news is beyond human understanding, many believe that the peak is about to be reached, and that a gradual decline in infections and deaths will follow.

As a result of the above, U.S. futures markets have rebounded, with the Dow Jones gaining up to 700 points, or 4.0%. The S&P 500 and NASDAQ also followed with huge gains of up to 3.9% and 4.0% respectively. Many may be surprised by these gains considering that a few days ago, the U.S. unemployment rate rose from 3.6% to 4.3%. This increase can be attributed to the fact that non-farm payrolls reached -695,000, up from a forecast of -99,000. However, with the potential for fewer daily infections, markets are beginning to believe the worst is over.

The actions of the FED and the Treasury have also helped to create confidence in the markets, knowing that everything that can be done, both in budgetary and monetary terms, is being done. This week will also see the release of the FED Minutes for last month. A month in which several rate cuts have taken place. Knowing the state of mind of the FED when making these decisions could either create more panic or instill more confidence.

Oil market

The other market that will require special attention this week will be the state of the oil markets. Donald Trump sent the markets to their biggest daily gain of 23% at the end of last week after announcing that Russians and Saudi Arabians were planning to cut oil supplies by 9 million barrels a day. The news was followed by a scheduled OPEC+ call, which was later cancelled as tensions within the cartel continued.

With prices now at $26.50 a barrel, the interesting question for this week will be whether there will be any other significant price movements? The current price level is acting as a resistance, so any further discussion with OPEC this week could either break this resistance or maintain it.