IS Risk Analytics' View From the Desk - April 2020
April saw broker volumes fall off significantly from the near-record numbers recorded in February and March. Profits, though down as well, were respectable as a result primarily of mid-month moves in oil markets that saw prices fall briefly into negative territory. Profits were also buoyed by movements in gold and US indices. Oil prices will likely be in focus again in May as we approach the expiration of this month’s futures contract.
*Average Daily Volume represents the daily volume from ISRA customers for each day of the month divided by the average daily volume for the month. Each day is represented as a percent of the average.
** Average Daily B Book PnL represents the daily B Book PnL from ISRA customers for each day of the month divided by the average daily B Book PnL for the month. Each day is represented as a percent of the average.
Source: IS Risk Analytics Database. Past Performance is not necessarily indicative of future results
Another trade war between the United States and China may be brewing as the US is considering restoring tariffs on Chinese goods as a way to punish China for its handling of the coronavirus outbreak. In addition, the US is “turbocharging” an initiative to move its supply chain dependency away from China.
The numbers were even worse in the Eurozone which saw GDP drop at an annual rate of over 14 percent. This is likely the result of the pandemic hitting Europe earlier than the United States. The European Central Bank’s chief economist has warned it may take three years for the economy to fully recover from the effects of the coronavirus pandemic.
The United States reported that its gross domestic product fell at a 4.8 percent annual rate in the first quarter of 2020. This was the first decline since 2014 and the worst quarterly contraction since 2008. There are likely worse numbers incoming as widespread layoffs and business closings did not truly begin until March. Some economists believe that second quarter figures could show contraction at an annualized rate of over 30 percent.