Insights
Market Review - April 2020
April Overview
In the Euro Area, Q1 2020 GDP growth was recorded as a quarterly 3.8% contraction, below market expectations with Spain, Italy and France contracting by the largest amount on record. France is now in a technical recession (2 consecutive quarters of negative GDP growth). PMIs took another leg down in April, with the Composite number falling to 13.5, an all-time low, driven by services although manufacturing was also weak. Consumer confidence also dropped to -22.7 in April, the lowest figure since March 2009, this could partly be driven by unemployment claims going up in March. Not all of these people, however, are actively looking for work (e.g. confinement measures or childcare), so the official unemployment number for March was surprisingly resilient only rising to 7.4% from 7.3% in February. Having expanded quantitative policy measures in March, in April the European Central Bank’s Governing Council kept most monetary policy conditions as they were, although they did reduce the interest rate on their existing refinancing operation as well as introduce a new Pandemic Emergency refinancing operation, which will mature in Q3 2021, effectively providing a liquidity backstop.
