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March started the way February ended – i.e., with utter carnage – leaving the markets in a seriously bad way. Do they stand any chance of posting a significant recovery this week?

US: Will we see any respite for the markets?

At present it is hard to tell where any relief will come from, other than investors simply deciding that the markets have fallen far enough to become an attractive proposition despite the global uncertainty.

Various interventions by the world’s central banks, including an impromptu rate cut from the Federal Reserve, have garnered mixed results. For, while investors are desperate to see these attempts at stimulus, their sudden nature has only served to underscore the seriousness of the situation.

In terms of what could make things worse, well, a pandemic is yet to be officially declared by the World Health Organisation. A sharp rise in the death toll in the US would likely be felt market-wide, ditto any further outbreaks akin to those seen in Italy, Iran and South Korea.

Another round of company warnings would also further undermine sentiment, as sectors beyond those immediately impacted – like travel and commodities – start to assess the cost of the crisis.

As for the week’s economic calendar, it’s actually fairly light – we’re yet to enter that crucial time period when the really relevant data will be released. Monday has perhaps the most important figure, as February’s Chinese trade balance reading is posted, while Wednesday sees US inflation and Friday the preliminary UoM consumer sentiment numbers.

UK: Market sentiment and the annual budget

It is highly likely that the FTSE’s week will be dictated, as it has done for the last month, by the generalised market sentiment.

However, the UK does have something region-specific to deal with: the first annual budget of the Boris Johnson administration. Rishi Sunak hasn’t actually had too long to put the budget together, abruptly taking over the chancellorship following the abrupt departure of Sajid Javid. He may, then, be thankful it might get buried under the latest coronavirus headlines.

Most pertinent to the markets could be the section re-written to deal with the outbreak – namely how much money the government is prepared to spend to soften the blow of the crisis.

UK Stocks To Watch

Meanwhile the corporate calendar brings updates from Clarkson on Tuesday, Balfour Beatty and Dignity on Wednesday, and Computacenter, G4S and Galliford Try on Thursday.

Eurozone: ECB set to meet

The ECB are in a tougher position than some of its central bank peers. For the Brussels-based institution is already operating under negative interest rates – they currently sit at a record low of -0.5%. That may give Christine Lagarde and her team pause on Thursday, as the ECB becomes the first central bank to hold a scheduled meeting since the coronavirus became a major concern.

Elsewhere the German industrial production reading arrives on Monday, followed by the French and Italian figures on Tuesday.

This article is brought to you in association with Spreadex. All opinions expressed in this article are from the author and do not necessarily represent the opinions of The Armchair Trader. You can find out more about Spreadex products and services here, or find more articles from Connor Campbell here.

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Connor Campbell

Connor Campbell

Connor joined Spreadex in 2014 as part of a newly expanded financial analyst team after graduating from the University of Southampton with an MA in English. His focus is on providing Spreadex's customers with up-to-date and informative news, and is responsible for the market analysis found on the Spreadex website.

Connor produces three daily market updates, a daily stock earnings preview, a weekly financial market preview piece every Friday, a round-up of all the big financial stories making the weekend press every Monday morning and regular stock market features.

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