Are lockdowns effective?

The growth rate of confirmed cases of Covid-19 in major dew3w2veloped countries (Eurozone economies, US) extended weeklong decline. Coupled with a bounce oil they fueled risk-taking in stock markets, causing more pressure on safe heavens, such as Yen, Gold, CHF.

Here is the chart combining growth rates in recent epicenters of the disease:

The growth rates have been steadily declining in all countries we are looking at, which probably indicates that lockdowns are working. Italy seems to be leading the way, which is probably explained by restrictive measures put in place earlier. Other countries are likely to catch up with Italy later.

Asian data

News from the economic front also supported market optimism. Asian statistics are noteworthy in this regard. Industrial production in South Korea grew by 11.4% in February compared to the same period a year earlier, despite a 3.8% MoM decline, which nevertheless beat market expectations.

Activity in China manufacturing and services sectors unexpectedly climbed into positive territory in March, after very depressing numbers in February. PMI in the manufacturing sector rebounded from 35.7 to 52 points, in the services sector – from 29.6 to 52.3 points. The sub-indexes “production volumes”, “new orders”, “employment” printed above 50 points, however, the components of import and export orders were in the zone of contraction.

Businesses of all sizes have reported improved conditions:

As for the PMI in services sector, only two components were in the green zone – business expectations and business activity. The components of employment, prices, new orders continued to decline, thus limiting the positive effect.

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