Wall Street Surges At Open On Jobless Surprise

U.S. stock markets surged at the opening on Friday after an expected and large rise in employment in May strengthened hopes that the worst of the coronavirus pandemic was over, and bolstered confidence in a speedy, ‘V-shaped’ recovery.


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By 9:37 AM ET (1337 GMT), the Dow Jones Industrial Average was up 672 points, or 2.6%, at a three-month high of 26,954 points. The S&P 500 rose 2.1% and the Nasdaq Composite was up 1.4%.

The Labor Department had earlier reported that the economy created 2.509 million net jobs in the month to mid-May, causing the jobless rate to fall from its postwar high of 14.7% to 13.3%. Analysts had expected nonfarm payrolls to shrink by 8 million.



“There will naturally be some doubt lingering about these figures given they are telling such a different story to all other data on the labor market, but these are the official ones and on the face of it are fantastic,” ING’s chief international economist James Knightley said in a research note. “It suggests the American economy can bounce back very vigorously and we all need to massively revise up our economic projections.”

The biggest individual gainers were, again, those that had lost the most on the way down, including Hertz Global and Luckin Coffee (NASDAQ:LK), both of which have already filed for bankruptcy protection. Among more viable businesses, American Airlines (NASDAQ:AAL) stock and Occidental Petroleum (NYSE:OXY) stock both rose 23%, the latter helped further by reports that OPEC and its allies will meet on Saturday to confirm a one-month extension to the current deal keeping a total of 9.7 million barrels a day of oil off world markets.



U.S. Crude futures hit their highest in three months on the news, rising as high as $39.55 a barrel before retracing a little to trade at $39.05, up 4.4% on the day.




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UK To Launch Big Stimulus Package Before Summer

Britain’s government is planning to launch a big stimulus package before the summer with a focus on creating jobs and infrastructure projects to help drag the economy out of the coronavirus crisis, the Financial Times reported.


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Finance minister Rishi Sunak declined on Friday to say whether he would bring forward his next budget statement, due in the autumn, to spell out how he will tackle Britain’s surging debt.

But Prime Minister Boris Johnson’s government was elected in December after promising to upgrade the country’s creaking infrastructure and the FT said this would form a central part of its recovery programme, along with the retraining of workers.

“We are trying to identify shovel-ready projects — we want to get a move on with this,” it quoted one minister as saying.

Sunak said on Friday that employers hammered by the coronavirus shutdown would have to gradually start contributing to the government’s hugely expensive wage subsidy scheme, but only from August.



The government has been paying since March 80% of the wages of workers who are temporarily laid off, and who now total 8.4 million, to limit a surge in unemployment.

While that has been warmly welcomed by unions and business groups there are still fears that many jobs will go in sectors which will struggle to reopen, such as hospitality, retail and aviation.



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Economic Indicators – Japan Exports Fall Most Since 2009 As Pandemic Wipes Out Global Demand

Japan’s exports fell the most since the 2009 global financial crisis in April as the coronavirus pandemic slammed world demand for cars, industrial materials and other goods, likely pushing the world’s third-largest economy deeper into recession.

The ugly trade numbers come as policymakers seek to balance virus containment measures against the need to revive battered parts of the economy, with the risk of a second wave of infections only complicating this challenge.



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The central bank will hold an emergency meeting on Friday to work out a scheme that would encourage financial institutions to lend to smaller, struggling firms. Policymakers are also considering cash injections for companies of all sizes.

Ministry of Finance (MOF) data on Thursday showed Japan’s exports fell 21.9% in April year-on-year as U.S.-bound shipments slumped 37.8%, the fastest decline since 2009, with car exports there plunging 65.8%.

The fall was the biggest since October 2009 during the global financial crisis, but slightly less than a 22.7% decrease seen by economists in a Reuters poll. Exports fell 11.7% in March.

“Reopening of trade with China led China-bound exports of electronics parts and imports of masks and PC, but trade with Europe, America and Southeast Asia remain shrunk,” said Takeshi Minami, chief economist at Norinchukin Research Institute.


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“It’s still far from fully-fledged resumption of economic activity. As exports and imports remain stagnant for a prolonged period of time, global trade will remain contractionary for the time being.”

Exports to China, Japan’s largest trading partner, fell 4.1% in the year to April, due to slumping demand for chemical materials, car parts and medicines.

Shipments to Asia, which account for more than half of Japanese exports, declined 11.4%, and exports to the European Union fell 28.0%.

Other trade-reliant economies in Asia have also been hit with data on Thursday showing South Korea’s exports slumping by a fifth in the first 20 days of May, year-on-year.

Industry data released last week showed Japan’s machine tool orders in April fell to their lowest level in more than a decade, a sign of deteriorating business spending.

Japan’s economy slipped into recession for the first time in 4-1/2 years, putting the nation on course for its deepest postwar slump as the pandemic ravages businesses and consumers.





Monday’s first-quarter GDP data underlined the broadening impact of the outbreak, with first quarter exports plunging the most since the devastating March 2011 earthquake and tsunami.

A private sector manufacturing survey showed on Thursday the decline in Japan’s factory activity accelerated in May as output and orders slumped.

Analysts warn of an even bleaker picture for the current quarter as consumption crumbled after the government in April requested citizens to stay home and businesses to close.



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Behind Bond Market’s Stall, Investors See Hard Times Ahead

For much of the past month and a half, the yield on the benchmark 10-year U.S. Treasury note has hovered around two-thirds of a percentage point—a shade above its all-time low of around 0.5% set in March.



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Taken together, the low level of the 10-year yield and its stability suggest that bond investors not only hold a dreary economic outlook but also are unusually confident in that perspective, a contrast with the optimism that has carried stocks to their highest levels since early March.

An important benchmark for interest rates across the economy, the ultralow 10-year Treasury yield has facilitated an explosion of corporate-bond issuance from the likes of Costco Wholesale Corp., Apple Inc. and Clorox Co. Monday’s news that an experimental coronavirus vaccine from the drugmaker Moderna Inc. had shown promise in an early trial helped push the 10-year yield to the top of its recent range. But the yield, which falls when bond prices rise, edged lower again Tuesday and remained at roughly half of its low from before this year.

Two factors typically determine longer-term Treasury yields. One is investors’ estimates of the average federal-funds rate set by the Federal Reserve over the life of a bond. The other is what is sometimes referred to as a risk premium, or an extra amount of yield investors demand to be compensated for the chance that short-term interest rates could rise higher than anticipated as a result of scenarios such as accelerating economic growth and inflation.

Tuesday’s closing 10-year yield of 0.711% suggests many investors believe that the Fed could basically repeat its postcrisis playbook: leaving the federal-fund rate near zero for about seven years before raising it to around 2%. Yields are lower than they were a decade ago in large part because investors feel more assured about that outcome, having seen the central bank implement such policies before without spurring a significant pickup in inflation.



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The risk premiums embedded in Treasurys “are basically zero or nonexistent,” said Thanos Bardas, global co-head of investment grade at Neuberger Berman. Expecting yields to remain rangebound over the next few quarters, Mr. Bardas said he likes Treasurys in the seven to 10-year range and has high hopes for the new 20-year bonds that are set to be reintroduced by the Treasury Department on Wednesday.

The stability of Treasury yields is particularly notable because it comes even as an unprecedented deluge of new debt floods the market. Not only has the Treasury Department ramped up the size of bond auctions to fund trillions of dollars in economic-relief measures but higher-rated companies also have been bombarding investors with new bond sales as they try to replace revenue that is being lost as a result of the coronavirus pandemic.

he Fed, meanwhile—after saying in March it would buy an unlimited amount of Treasurys—has slowed the pace of its purchases to $6 billion a day from $75 billion a day. Still, yields have barely budged, indicating that “globally, there’s tremendous demand for that high-quality debt,” said Colin Robertson, head of fixed income at Northern Trust Asset Management.

Treasury yields that are reliably this low have wide-ranging implications for markets and the economy. For investors, paltry yields might signal a gloomy future. But they can also propel them into riskier assets in search of returns, a likely factor in the surprisingly strong rebound in stocks since their sharp decline earlier in the year.

Low yields have also encouraged borrowing. For a brief period in March, corporate borrowing costs shot upward as fear gripped markets and investors sold bonds from even the safest companies. Since then, though, the average extra yield investors demand to hold investment-grade corporate bonds over Treasurys has shrunk, enabling businesses to benefit from the low benchmark rates.

Last month, Costco sold 10-year notes with a 1.619% yield, the lowest on record for that maturity, according to LCD, a unit of S&P Global Market Intelligence. Other companies that have recently issued 10-year bonds with sub-2% yields include Apple, Clorox and International Business Machines Corp. Overall, through Monday, nonfinancial companies had issued $148 billion of investment-grade bonds this month after selling a record $231 billion in April, according to Dealogic.

Treasury yields could turn even less volatile if the Fed adopts a policy known as yield-curve control, several analysts said. A cousin of quantitative easing, yield-curve control entails purchasing an unlimited amount of bonds at a particular maturity to peg rates at a target.







Yield-curve control has been used for years by the Bank of Japan to keep the yield on 10-year Japanese government bonds at around 0%. In March, the Reserve Bank of Australia said it would set a target of 0.25% for the country’s three-year government bond.

In the U.S., Fed Chairman Jerome Powell said last fall that “short-term yield-curve control is something that is worth looking at” as a tool to fight the next recession. It is far from certain that the Fed will enact such a policy. Still, the mere discussion has likely contributed to the bond market’s calm, analysts said.

Something similar happened to corporate bonds after the Fed said in March it would start buying the securities, said Thomas Simons, senior vice president and money-market economist in the Fixed Income Group at Jefferies LLC. Though it was nearly two months before the Fed started implementing the program, the announcement alone sparked a rush into the asset class as investors anticipated the Fed’s backing.

“Just knowing that the Fed could do something is almost the same as the Fed actually doing it,” Mr. Simons said.

Not all investors are unconcerned about a pickup in inflation that could push longer-term yields higher. A welcome surprise—such as an early vaccine available for emergency use this fall—could provide a major boost to the economy. Some also see risk in the tremendous amounts of money that the federal government is spending to help the economy, coupled with the promise of unlimited bond-buying from the Fed, which essentially helps finance that spending.

“The Fed wants to push inflation higher, and is willing to keep monetary policy accommodative even as the economy recovers from the Covid-19 shutdown to get inflation expectations up,” said Donald Ellenberger, senior portfolio manager at Federated Investors. Mr. Ellenberger said he therefore sees value in Treasury-inflation-protected securities, or TIPS.

Still, he said, his team’s strategy is to “trade the range”—betting on higher yields when the 10-year falls below 0.6% and lower yields if it approaches 1% in large part because of the Fed’s continued bond-buying and desire to support the economy.



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Global Stock Markets Mixed – Investors Continue To Weigh The Prospects For Economic Recovery From The Pandemic

U.S. stock futures rose, while international markets were mixed, as investors continued to weigh the prospects for global economic recovery in the wake of the coronavirus pandemic.

S&P 500 futures were up 0.6%, suggesting U.S. stocks could open higher Wednesday. The pan-continental Stoxx Europe 600 dropped 0.4%. Markets in France, Germany and Switzerland were closed for a public holiday.



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In Asia, Japan’s Nikkei 225 and Korea’s Kospi Composite rose 0.8% and 0.5% respectively. That put both on course for their fourth straight day of gains. Hong Kong’s Hang Seng was little changed, sliding less than 0.1%, while Australia’s S&P/ASX 200 rose 0.2%, reversing earlier losses. The Shanghai Composite declined 0.5%.

Foreign and institutional funds—detecting more signs that some economies are slowly returning to normal—have started reallocating investments back into Asia, and particularly China, said David Chao, global market strategist for Asia Pacific ex-Japan at Invesco.




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Mr. Chao said valuations of Asia shares were lower than those of developed-market peers, adding to investor incentives to buy the region’s stocks.

“Equities are expensive in developed markets like the U.S., and they’re not yet out of the woods with the coronavirus,” he said.

However, he warned that escalating trade tensions between the U.S. and China, coupled with economic weakness in developed countries, could weigh on stock performances globally.

Mr. Chao said U.S. stocks could be volatile in the months ahead, as investors become less optimistic about a V-shaped recovery.

“It feels like the calm before the summer storm,” he added.

A couple of near-term catalysts could lift regional markets, said Ben Powell, BlackRock Investment Institute’s chief investment strategist for Asia Pacific. One would be data—such as exports from South Korea, Taiwan and other trade-reliant economies—that started to show a recovery in global economic activity.







New stimulus measures by governments and central banks could be another trigger. China could detail new government spending plans during national legislative meetings that start Friday, while in Japan, the central bank will meet Friday to discuss further aid to financial institutions.

In the energy markets, West Texas Intermediate futures, the main gauge for U.S. crude oil prices, declined less than 0.1% to $31.93 a barrel. Global benchmark Brent crude rose 0.3% to $34.76 a barrel.

The yield on the 10-year U.S. Treasury note fell to 0.699% from 0.711% Tuesday. Bond prices rise as yields fall.



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Stocks Surge As Oil Prices Rally

Stocks have their biggest gain in weeks as Wall Street is encouraged by a vaccine prospectvaccine prospect. Many of the world’s economies have begun to loosen restrictions on commerce, the Federal Reserve chair on Sunday signaled that the central bank has more firepower to lend to recovery efforts, and a drugmaker reported positive developments in an early trial of a coronavirus vaccine.



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Taken together, the developments set off a surge in global stock prices and Wall Street had its best day in about six weeks.

The S&P 500 rose more than 3 percent Monday, while stock benchmarks in Europe were 4 percent to 6 percent higher.

Before trading began in the United States, the drugmaker Moderna said its coronavirus vaccine showed promising early results in tests on humans. The early-stage tests were on just eight people, but the hope that a vaccine might be quickly developed was enough to give stock prices a lift.

Also bolstering markets was a pledge from Jerome H. Powell, the Fed chair, that there was “really no limit” to what the central bank could do with its emergency lending facilities.

“The one thing I can absolutely guarantee is that the Federal Reserve will be doing everything we can to support the people we serve,” Mr. Powell said during a television interview broadcast on Sunday.

The Fed chair also suggested that the worst economic readings were yet to come, even as states begin to gradually reopen. He said that he expected “a couple more months” of job losses and acknowledged that the unemployment rate, which hit 14.7 percent in April, could peak at 20 percent or even 25 percent.







Still, investors were looking for silver linings as the world grapples with lockdowns and other restrictions. Japan released economic figures on Monday that showed its economy formally fell into recession, but Tokyo has begun easing some of its containment efforts. Some restrictions have also been lifted in parts of Europe and the United States.

And trading on Monday had all the characteristics of a rally focused on the prospects for a return to normal. Shares of companies that stand to gain the most, like United Airlines, Expedia Group and Marriott International, were among the best performers in the S&P 500.

Businesses that have benefited as Americans stockpiled food and cleaning supplies, like Campbell Soup and Clorox, were among a small number of decliners.

Oil prices also reflected optimism about the economy, with West Texas Intermediate, the U.S. benchmark, rising above $30 a barrel for the first time since March. Shares of energy companies like Chevron and Exxon were also sharply higher.



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Oil Outlook Vastly Different Than When It Plunged Into Negative Territory A Month Ago

The fortunes of the oil market have turned around dramatically in the past month. This time last month, investors were watching the futures market in disbelief. The May contract for West Texas Intermediate oil was set to expire, and prices did the unthinkable — they plunged 300% in one day, deep into negative territory. In the spot market all across North America, prices also turned negative, meaning people literally couldn’t even give oil away.



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There were dire forecasts of much more pain ahead, and a recurrence of the wild trading was feared for the June contract. But now the outlook is much improved, as the June contract is set to expire Tuesday. The world has changed, and the ugly crisis created by both oversupply and a sudden lack of demand is beginning to reverse.

“We think fundamental right steps have been taken to get us on sounder footing,” said Helima Croft, head of global commodities strategy at RBC. Croft said the “green shoots of recovery in place,” as Chinese and U.S. demand are improving, and OPEC plus ended its feuding and agreed to sharply cut output.

China has been buying more oil, and its demand is clearly strengthening. U.S. drivers are getting back into their cars as coronavirus shutdown restrictions lift. On the supply side, Saudi Arabia last week added another 1 million barrels a day cut of its own to the OPEC plus deal for a 9.7 million barrel reduction, and America’s oil industry has cut its production quickly and sharply.

Oil prices jumped sharply Monday, rising on the positive developments and a rally in risk markets sparked by Fed Chairman Jerome Powell’s comments that the Fed will can do more to support markets and the economy. WTI futures for June were up 7.4% at $31.62 per barrel in afternoon trading.

Now, the demand side of the market and the supply side are improving in tandem, to reduce the oil glut that was close to filling all available storage facilities, including ships at sea. The fact that the world was running out of places to store oil in April was behind the sharp drop in the futures contract. Investors were unable or unwilling to take delivery of oil, and there were also investors who became trapped in the trade as the selling spiraled. Interactive Brokers took a $109.3 million hit to cover its customers’ losses.

Oil is now trading above $30 for the first time since March 17, and RBOB gasoline futures have risen above $1 per gallon for the first time since March 13. The strong move higher in the June contract is also forcing some investors to cover short positions, adding to the rise.







The United States Oil Fund ETF, based on futures contracts, was up more than 8% Monday. Some investors initially blamed USO for causing the market disruption last month, but the fund had already rolled out of the May contract before the market began to crater. A popular oil play for retail investors, USO has since restructured its holdings to distribute them more evenly across later dated contracts, rather than holding them in the front month.

As the June contract gets set to expire, the landscape has changed dramatically for the U.S. oil industry. U.S. production was at a record high in March, and has cut back by 1.5 million barrels a day in just about six weeks, to 11.6 million barrels a day, according to the Energy Information Administration’s latest weekly data. Analysts expect production could be down by another 500,000 to 1 million barrels soon.

“It’s just a massive response by the U.S. industry,” said John Kilduff, partner with Again Capital. “This is a remarkable plunge in activity. … It’s pretty clear the U.S. is now the swing producer.”

Baker Hughes reported that another 34 oil rigs went out of service last week, leaving just 258 active oil rigs, about a third of the rig count last year.

“Storage at Cushing actually fell last week. That was the whole mechanism last month that drove the negative pricing,” said Kilduff. “There were barrels to take in and no place to put them.” Cushing, Oklahoma is the storage hub for WTI, so the market watches storage levels there closely.

“The pace was such that it would have been topped out by the end of June,” Kilduff said, but that seems to have reversed. Traders said oil prices were also lifted Monday by a report from Genscape that showed another big drop in Cushing storage levels. Government data on the latest storage levels will be released Wednesday.

The weekly U.S. government data shows implied demand for gasoline was also up sharply, with demand at 7.4 million barrels a day, from the early April trough of 5.1 million barrels a day. Normal demand for this time of year is about 9.5 million barrels a day, and it peaks ahead of the July 4 holiday. Analysts said the government data overstates retail demand, which is more like 6.5 million barrels a day in mid-May.

Analysts say demand has improved and as of last week, it was off by about 30% from normal levels, much better than the approximately 50% drop in demand in early April. U.S. gasoline demand is key because it is typically equal to about 10% of global oil demand.

Francisco Blanch, head of global commodities and derivatives at Bank of America, said he expects the rally to continue for now, but prices will not go that much higher. “This is a recovery that has a pretty low ceiling. My sense is that if prices approach $40 a barrel, then production will come back pretty quickly,” he said.

Oil prices were also helped Thursday by a news report that Chinese demand has returned to levels near where it was before the lockdown there.

RBC has been tracking Chinese data, including on airline flights, and it expects demand will recover an average 9% this quarter, 17% in the third quarter and 25% in the fourth quarter from the lows seen during the first quarter. Croft expects the recovery in China to be the quickest, relative to other global regions.



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Which Trading Platform Is Best In UK?



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Japan’s Economy Fell Into Recession In First Quarter Of 2020

The world’s third-largest economy after the U.S. and China shrank an annualized 3.4% in the January-March period, pushed down by the initial effects of the coronavirus pandemic. That followed a revised 7.3% contraction in the previous quarter that was triggered by an increase in the national sales tax. Two straight quarters of contraction is one definition of a recession.




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“The situation has become even more severe in April and May after a state of emergency was issued,” Economy Minister Yasutoshi Nishimura said Monday. “The economy is expected to shrink substantially for the time being.”

Prime Minister Shinzo Abe declared a national state of emergency in April to contain the spread of the coronavirus. Last week, he lifted it in 39 of 47 prefectures. It still applies in Tokyo and Osaka, but is expected to end nationwide in the next week or two.

Many stores and restaurants have closed during the pandemic, while tourism has virtually halted because most foreign visitors are barred from entering the country and Japanese people have been encouraged to avoid travel.

Economists are forecasting a contraction at an annualized pace of 20% or more in the current quarter.

Exports fell at an annual rate of 21.8% in the first quarter, reflecting supply-chain disruptions and lockdowns in China, one of Japan’s biggest markets. Private consumption and capital spending by companies also fell, but not as much.





Daiwa Securities economist Mari Iwashita said exports were likely to fall further with lockdowns continuing in some countries. She said imports might improve as China’s economy moves closer to normal operations and provides Japan with personal computers for people working at home and masks.

Société Générale economist Takuji Aida said that even after Japan’s state of emergency lifts, the pace of economic recovery may be slow because many people may see their income reduced or lose their jobs. “Households and companies are reaching their limits of their strength,” he said.

Mr. Nishimura, the economy minister, said the government planned to put together an additional spending package by about May 27, including further support for corporate financing and aid for students. In April, Parliament passed a measure with some $240 billion in spending, including cash payments of about $935 to every person in Japan.



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Stocks Rally As Hopes For New Virus Vaccine Build

Shares of Moderna, a company that has been working on a vaccine for the coronavirus, jumped 21%. The company said it had positive results from early human tests of its vaccine.



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U.S. stocks rallied Monday on hopeful news around a potential coronavirus vaccine, recovering ground following their biggest weekly percentage drop in nearly two months. The Dow Jones Industrial Average jumped 732 points, or 3.1%, to 24419, the S&P 500 rose 2.7% and the Nasdaq Composite added 2%.

The gains wiped out last week’s losses. The S&P 500 shed 2.3% last week after a range of data highlighted the sharp contraction in economic activity across the nation. European indexes also climbed, with the pan-continental Stoxx Europe 600 gauge rising 3.1%. Most major Asian benchmarks ended the day higher.

Shares of Moderna, a company that has been working on a vaccine for the coronavirus, jumped 21%. The company said it had positive results from early human tests of its vaccine.

“The idea that there has been progress in Moderna’s trials but also the more positive news that it looks like coronavirus could be tackled with a vaccine, has helped boost sentiment,” said Edward Park, deputy chief investment officer at Brooks Macdonald.

In bond markets, the yield on the benchmark 10-year Treasury edged up to 0.679% from 0.640% Friday. Yields move inversely to bond prices.

The S&P 500’s energy, real estate, industrials, materials and financials sectors all rose at least 3%. Energy was up 5.8%, driven by an 8.9% gain in crude-oil futures.

As economies emerge from monthslong lockdowns, markets will tend to creep higher, according to Paul Chew, head of research at Phillip Securities in Singapore. But a stronger rally would have to wait until investors believed there is little risk of a big second wave of infections, he said.

Virus-related news has been a bigger driver of stocks than economic data, which are lagging indicators, Mr. Chew said. “Even with better economic numbers, the market won’t rejoice,” he added.

Travel companies and airlines led gains among European stocks. Holiday provider TUI rose 13.5%, Ryanair Holdings climbed 13% and British Airways owner IAG Group rose 10%.

There were several factors behind the rise, said Russ Mould, investment director at AJBell. Major tourist destinations Italy and Greece signaled they would accept tourists from countries where international travel was permitted.

European flight operator Ryanair reported its full-year results Monday and reiterated that it planned to resume 40% of its flights from July. After grounding 99% of its aircraft in April, investors were concerned about missing out on buying the dip, Mr. Mould said.

“There’s an element of get in now; it can’t get worse and it might get sharply better,” he said.



Federal Reserve Chairman Jerome Powell cautioned Sunday that the U.S. economic recovery could take more than a year. The unemployment rate is likely to keep rising through June and then begin to decrease as businesses reopen, and both the Fed and lawmakers may need to do more to bolster the economy, he said in a broadcast interview.

“If lockdowns might be eased over a longer period of time, that would lead to recovery not really taking place until 2021,” Mr. Park said. “The size of the recession in the first half of 2020 is almost being viewed by markets as a curiosity, as investors believe the growth will be at least partially recouped.”

“The worse the news gets the more support there will be from central banks, and therefore more liquidity, as far as some investors are concerned, which is why they are buying,” Mr. Mould said. “That’s not the Main Street view, but it seems like the Wall Street view.”

Most equity benchmarks in the Asia-Pacific region were up less than 1%. Japan’s Nikkei 225 gained 0.5%, while the Shanghai Composite Index edged 0.2% higher. Australia’s benchmark S&P/ASX 200 traded 1% higher.

Fresh data Monday showed Japan’s economy, the world’s third-largest after the U.S. and China, fell into a recession in the first quarter. The economy shrank an annualized 3.4% in the three months ended March 31 after a 7.3% contraction in the previous quarter. Economists expect Japan’s economy to shrink by an annualized 20% or more this quarter as the pandemic keeps tourists away and depresses spending by households and companies.



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Financial Markets – Top 5 Things To Watch This Week

This Tuesday will see Federal Reserve Chairman Jerome Powell testify to Congress on the economic stimulus measures put in place so far. A day later the minutes of the Fed’s April meeting are scheduled to be released.


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Investors will be looking at the weekly jobless claims data as the reopening of the economy gathers pace. Retail earnings will shine a light on consumer spending amid the coronavirus pandemic, while Tuesday brings the monthly expiration of U.S. West Texas Intermediate crude futures contract. Meanwhile, central banks in South Africa and Turkey are expected to cut interest rates again.

Here’s what you need to know to start your week.


Powell testimony, FOMC minutes
The Fed chairman is to testify on Tuesday before the Senate Banking Committee alongside Treasury Secretary Steven Mnuchin to update government officials on the economic stimulus programs approved so far.

In a speech last week Powell gave a sober assessment of the long-term risks to the U.S. economic outlook and the possible need for elected officials to approve more spending programs to keep the economy afloat.

On Wednesday, the Fed is to publish the minutes of it is April meeting. In its rate statement last month, the Fed said it will keep interest rates at near-zero until officials are “confident that the economy has weathered recent events.”


Economic data
In the U.S., the main datapoint continues to be the weekly report on initial jobless claims. With the reopening of the economy gaining momentum economists are hoping for a reading of below 2.5 million, which would indicate that the rate of layoffs is slowing somewhat.

There is a packed economic calendar in the U.K. this week, with updates on March employment, retail sales and inflation. Given that the lockdown in the U.K. didn’t start until late March it may be too early to see the impact of the pandemic on the employment figures.

The retail sales data for April could show at least a 15% decline in spending, while plunging oil prices are expected to have sent inflation tumbling last month.


Retail earnings
While the U.S. first-quarter earnings season is almost over the retail sector is just getting started. This week will see results from big U.S. retailers including Walmart (NYSE:WMT), Home Depot (NYSE:HD), Lowe’s (NYSE:LOW), Target (NYSE:TGT), Kohl’s (NYSE:KSS) and Best Buy (NYSE:BBY). Their figures will show whether U.S. consumers are still spending money despite the widespread coronavirus lockdowns.

The retailers are reporting in the shadow of online shopping giant Amazon (NASDAQ:AMZN), which is among the “stay-at-home” stocks benefiting from the lockdown. Its shares have soared some 28% this year.


Repeat performance of oil plunge?
The monthly expiration of U.S. West Texas Intermediate crude futures contract is coming up on Tuesday and many energy traders are worried about a repeat performance of the oil price slump last month which saw prices drop into negative territory for the first time ever.

Normally uneventful, the expiry turned dramatic in April as brimming storage tanks discouraged traders from taking delivery of oil.

The U.S. Commodities Futures Trading Commission has warned market participants they should be prepared for volatility and negative pricing again, with oil storage still tight and the demand outlook still severely depressed.

But oil prices have recently rebounded on hopes that the easing of lockdown restrictions will boost the energy demand outlook. In another hopeful sign, U.S. crude inventories fell in the most recent week for the first time since January.

Yet some traders seem to be heeding the CFTC’s warning. Volumes in the July futures contract, which expires in a month’s time, are outpacing the June contract by nearly 50%.


Emerging market rate cuts
Central banks in Turkey and South Africa are both to hold policy meetings on Thursday and both are expected to cut rates again despite heavy losses their currencies’ have recently endured.

Analyst polls predict South Africa will cut its 4.25% main rate by another 50 basis points. Economists stress any policy easing must be sizeable if it is to offer any help to the suffering economy.

Turkey’s meeting will be even more interesting. The lira has plunged to record lows, hard currency reserves are dwindling and inflation is in the double digits, yet all that probably won’t deter the central bank from chopping another 50-100 basis points off its 8.75% repo rate



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Which Is The Best Broker In Singapore?

Which trading platform is best in Singapore?


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What is the best stock trading platform in Singapore for 2020? ….  How To Choose The Best Online Broker in Singapore { 2020 } …


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To evaluate brokers, you should look at the following factors:

>>> Commissions
>>> Account Minimum
>>> Account Fees
>>> Your Trading Style and Tech Needs
>>> Promotions

Look at commissions on the investments you’ll use most… Brokers generally offer a similar menu of investment options: individual stocks, options, mutual funds, exchange-traded funds, and bonds. Some will also offer access to futures trading and forex (currency) trading.

The investments offered by the broker will dictate two things: whether your investment needs will be satisfied, and how much you’ll pay in commissions. Pay careful attention to the commissions associated with your preferred investments:

Individual stocks: You’ll typically pay a per-trade commission of $4 to $7. Some brokerages also offer per-share pricing.

Options: Options trades often incur the stock trade commission plus a per-contract fee, which usually runs $0.15 to $1.50. Some brokers charge only a commission or only a contract fee.

Mutual funds: Some brokers charge a fee to purchase mutual funds. You can limit mutual fund transaction costs or avoid them completely by selecting a broker that offers no-transaction-fee mutual funds. (Mutual funds also carry internal fees called expense ratios. These are charged not by the broker, but by the fund itself.)

ETFs: ETFs trade like a stock and are purchased for a share price, so they are often subject to the broker’s stock trade commission. But many brokers also offer a list of commission-free ETFs. If you plan to invest in ETFs, you should look for one of these brokers.

Bonds: You can purchase bond mutual funds and ETFs at no charge by using no-transaction-fee mutual funds and commission-free ETFs. Brokers may charge a fee to purchase individual bonds, with a minimum and maximum charge.

Pay attention to account minimums… You can find highly ranked brokers with no account minimum. But some brokers do require a minimum initial investment, and it can skew toward $500 or more. Many mutual funds also require similar minimum investments, which means even if you’re able to open a brokerage account with a small amount of money, it could be a struggle to actually invest it.

Watch out for account fees… You may not be able to avoid account fees completely, but you can certainly minimize them. Most brokers will charge a fee for transferring out funds or closing your account. If you’re transferring to another broker, that new company may offer to reimburse your transfer fees, at least up to a limit.

Most other fees can be sidestepped by simply choosing a broker that doesn’t charge them, or by opting out of services that cost extra. Common fees to watch out for include annual fees, inactivity fees, trading platform subscriptions and extra charges for research or data.

Consider your trading style and tech needs… If you’re a beginner investor, you probably won’t need extras, like an advanced trading platform. But you may want an education and a little hand-holding. This could include videos and tutorials on the broker’s website, or in-person seminars at branches. Many brokers offer these services free to account holders.

Active traders, on the other hand, will want to look for a brokerage that supports that kind of frequency. That includes weighing a broker’s trading platforms, analysis tools, research and data offerings in addition to commissions — including discounts for high-volume traders — and fees.

Plenty of high-quality online brokers offer free demo access to trading platforms.

Take advantage of promotions… Online brokers, like many companies, frequently entice new customers with deals, offering a number of commission-free trades or a cash bonus on certain deposit amounts.

It isn’t wise to choose a broker solely on its promotional offer — a high commission over the long term could easily wipe out any initial bonus or savings — but if you’re stuck between two options, a promotion may sway you one way or the other.


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◊ Best Stock Trading Platform In Singapore {2020} : Plus500 Review ◊


Plus500 is a streamlined broker that focuses on trading in a wide range of financial markets with relatively low spreads and no commissions but without offering many extra services. Plus500 has been in the forex and CFD business since 2008. They are registered in the U.K. and licensed by the Financial Conduct Authority (FCA).

The company offers access to a comprehensive product line including forex, stock indexes, equities, commodities, cryptocurrencies, ETFs and options. Plus500 is the first broker to introduce a bitcoin CFD in 2013. The company does not charge commissions on any of its trades.

All costs are contained within the spread for each of more than 2,000 trading instruments offered on Plus500’s WebTrader platform. Plus500 Ltd. (PLUS.L) is a publicly traded company on the AIM section of the London Stock Exchange since 2013 with a £1.73 billion ($2.25 billion) market capitalization and clients in more than 50 countries around the world. Plus500 offers access to more than 2,000 trading instruments.


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Trust … The company is registered with the Financial Conduct Authority (FCA), CySEC, ASIC, FSCA, FMA, MAS, and the ISA, which provides good accountability and visibility. The company is required to take steps to ensure client funds are not comingled with corporate funds – ensuring that client money and assets are protected in the unlikely event that Plus500 becomes insolvent – by holding those funds in segregated accounts at regulated banks.

If Plus500 defaults, any shortfall of funds of up to £50,000 may be compensated for under the Financial Services Compensation Scheme (FSCS). If the custodian bank holding client funds goes into liquidation, any shortfall of funds of up to £85,000 may be compensated for under the FSCS.

Plus500 also offers Negative Balance Protection, ensuring that clients cannot lose more than they have put into their account. Guaranteed stop losses can be used on some instruments depending on market conditions but they are subject to a wider spread.

The company does not charge commissions on any of its trades. All costs are contained within the spread for each of more than 2,000 trading instruments offered on Plus500’s WebTrader platform. Large volume traders do not get a trading discount at Plus500 and the spread is the same whether you trade one lot or 1,000 lots.

There are no charges for normal withdrawals or terminating an account. However, inactivity fees kick in after an account has been idle for three months. Beginning traders can open an account with as little as £100.

Traders can qualify for a “professional” account, which offers a higher level of maximum leverage, but the costs are the same. Investors with a professional account may increase their maximum leverage ten-fold, from 1:30 to 1:300.

Plus500 also offers access to options trading on many markets. These are very similar to plain call and put options traded on exchanges, but they are not standardized which means that the option premium can be customized for your risk tolerance and strategy objectives.


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Big Investors Aren’t Betting It All On A Coronavirus Cure


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Successful efforts that could help billions of people might not result in big profits for shareholders.


Shares are up for companies searching for coronavirus drugs and vaccines.


As drug companies race to discover treatments for the new coronavirus, big investment firms are placing cautious bets on likely winners.

Hedge funds and venture-capital firms, which are in the business of predicting the future for companies and economies, are growing more confident researchers will develop effective drugs to fight the pandemic.

Yet, successful efforts that could help millions—or even billions—of people, might not result in big profits for shareholders, the investors argue. Some are even placing bearish wagers on pharmaceutical companies they believe are attracting excessive excitement over their progress on Covid-19 treatments.

“Most of the stock prices don’t bear semblance to reality,” says Joseph Edelman, who runs Perceptive Advisors, a $4.2 billion New York hedge health-care fund, which is focused on what it sees as the disconnect between the price of stocks like drug company Gilead Sciences Inc. and their potential profits from any treatment or vaccine.

Shares are up for companies searching for coronavirus drugs and vaccines.

Gilead is up 18.9% this year, thanks to remdesivir, an antiviral drug administered intravenously that shortens the recovery time of hospitalized Covid-19 patients, according to recent data.

It is always hard anticipating successful drugs, but those wagering on coronavirus treatments face unique challenges. Some of the most innovative and promising approaches are wholly unproven. Companies are competing with foreign nations and not-for-profit organizations determined to achieve their own breakthroughs. Successful drugs or vaccines may run into pricing, manufacturing and distribution difficulties.

Among the issues investors are struggling with: Can Covid-19 treatments help those sick while also protecting individuals against the virus, or will that require different drugs? Will vaccines render treatments less necessary? Will governments allow companies to charge high enough prices to generate sizable profits?

Larry Robbins, who runs health-care hedge fund Glenview Capital Management, is avoiding bets on possible coronavirus treatments, partly because he expects researchers to find a vaccine, limiting the need for even the most effective treatments.

“We are all cheering for a treatment on a humanitarian level, but as an investor, you have to believe a treatment works, and that sales last long enough for it to have a material impact on a company,” he says.

Gilead is among the stocks that has investors thinking twice. The company expects to manufacture more than one million treatment courses of remdesivir by the end of this year, and the drug could have billions of dollars in new annual sales, investors say. If Gilead can develop an inhaled version of the drug or other alternatives to receiving it intravenously, its popularity could increase, bullish investors argue.


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But Gilead has promised to donate 1.5 million doses of Covid-19 treatments to hospitals free of charge, and the price it would charge thereafter is unclear, raising questions about eventual profits. In the past, Gilead has been criticized for placing high prices on its HIV and hepatitis treatments. It may feel pressure to keep a lid on remdesivir’s cost—especially given President Donald Trump’s past public criticism of drug prices.

If Gilead charges about $4,000 per course, as some investors predict, that would result in $4 billion of revenue for a million patients. That figure would be well below Gilead’s $14.6 billion of added market value this year—without taking into consideration the drug’s development costs, estimated to be about $1 billion, a figure that would reduce any profits.

Some bearish investors aren’t yet convinced of remdesivir’s efficacy.

“Even if the drug has only a modest effect, people will still prescribe it, but Gilead won’t make a lot of money,” says Dr. Joseph Lawler, who runs hedge fund JFL Capital Management, which is shorting, or betting against, Gilead.

Gilead’s company spokesman said the drug company hasn’t yet set a price for remdesivir.

“At this time, we are focused on ensuring access to remdesivir through our donation,” he said. “Post-donation, we are committed to making remdesivir both accessible and affordable to governments and patients around the world.”

Dr. Luciana Borio, who was director for medical and biodefense preparedness at the National Security Council, argues that smaller, private companies may emerge with the most effective treatments, not publicly traded companies, another challenge for investors.

“For technology that’s truly innovative and disruptive there’s opportunity for funding and interest in partnerships,” she says.

Some investors are focusing on treatments that may help those who are sick but also can prevent people from getting the virus, a larger potential market. These investors are betting on therapies that use antibody proteins generated by the body’s immune system. These antibodies may be able to block the action of the coronavirus’s “spike” protein, preventing the virus from infecting healthy cells.

Mr. Edelman, of Perceptive, owns shares of Regeneron Pharmaceuticals Inc., a leader in antibody therapies. The company is using a “monoclonal” antibody approach, where scientists select the most powerful antibodies from recovered coronavirus patients—or, in the case of Regeneron, from mice that have been given human immune systems—clone them, and turn them into drugs.



Regeneron plans clinical trials in early summer and is preparing to manufacture hundreds of thousands of doses each month beginning in late summer.

Robert Nelsen, who helps run venture-capital firm Arch Venture Partners, which made early and successful bets on cancer immunotherapy, is backing VIR Biotechnology Inc., which plans trials for its own monoclonal antibody therapy this summer.

“I’m pushing them every day,” Mr. Nelsen says. “We don’t know if the virus will be weaker or stronger or the same in the fall, but in 1918 it came back stronger, so we have to be prepared.”

Regeneron shares are up 52% this year, adding $23 billion in market value, while VIR is 148% higher and has added $2.3 billion in value. Some investors say if a vaccine is discovered it could limit these shares’ potential. Mr. Nelsen counters that it could take longer than expected for researchers to find vaccines, creating a huge market for antibody treatments.

“Vaccines are never 100% effective,” he argues, “so antibody therapeutics may be key to preventing a re-emergence.”

One high-risk, high-reward strategy: Buying shares of tiny companies with potential upside. Messrs. Edelman and Nelsen hold big chunks of ownership in VBI Vaccines Inc., an unproven biotech company claiming an experimental vaccine approach. The stock closed at $2.07 on Thursday.

Forecasting a winning vaccine is perhaps even harder than predicting coronavirus treatments. By some measures, Chinese companies and a group at Oxford University are in the lead. Some companies say they will distribute a vaccine they develop at cost, potentially reducing profits for others. Still, the potential market is huge—some investors believe a combination of vaccines may be necessary to meet global demand, perhaps a low-cost option for younger, healthier individuals and a more potent one for those who are immune-compromised.

Moderna Inc. has attracted the most excitement among vaccine makers, sending its stock soaring 230% this year, as it moves through human trials. Moderna’s strategy is to produce a vaccine using the virus’s genetic sequence, rather than its actual genetic material. It uses programmed material, called messenger RNA, or mRNA, with the goal of directing a patient’s immune system to produce antibodies to the coronavirus.

The approach, which may be able to produce a vaccine quickly, was described as “impressive” by Dr. Anthony Fauci, director of National Institute of Allergy and Infectious Disease. Pfizer and Germany’s BioNTech are working on their own mRNA vaccine.

But analysts note that mRNA technology is expensive and has never produced an approved medicine or vaccine. Moderna is already worth $24 billion, up from $6.5 billion at the beginning of 2020. As for Pfizer, the company already is worth $211 billion, so it isn’t clear how much a vaccine would increase the company’s value.

Some investors are skeptical of some of the highest-flying coronavirus stocks. Mr. Lawler of JFL Capital is shorting Inovio Pharmaceuticals Inc., a small Pennsylvania company that’s up 314% this year despite limited past success.

A spokesman for Inovio says it is in phase one trials for a Covid-19 vaccine and expects results in June, while working on other medicines.

“The general public is throwing money at headlines,” says health-care investor Brad Loncar at Loncar Investments.



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Day Trading: Top 3 Things To Watch For May 15

It was quite a comeback for the Dow today as investors finally decided to dip back into financial stocks. Bulls will hope that the same sentiment that was able to shrug off a rise of 3 million in jobless claims today will be on hand tomorrow, with more devasting data expected.
Here are three things that could move the stock market.


1. Consumer in Focus
Retailers without a big online presence will be hoping measures to reopen across the country will start paying dividends quickly. The market will get see what is expected to be another historically band month for sales. The Commerce Department will report the April retail sales figures at 8:30 AM ET (12:30 GMT).

Economists expect that retail sales plunged 12% last month, according to forecasts compiled by Investing.com. That would be the biggest drop ever, taking the top spot from March’s dive of 8.4%. Core retail sales, which exclude autos, are forecast to have dropped 8.6%, compared with a 4.2% drop in March. There will be more shopping data when the University of Michigan issues its preliminary measure of May consumer confidence at 10:00 AM ET.

The consumer sentiment index is seen dropping to 68 from 71.8 in April. That would still be well off the lows seen during the Financial Crisis and the early 1980s. And the Michigan consumer expectations index is forecast to tick up to 71.8 from 70.1 last month.


2. JOLTS, Empire Manufacturing on the Cards
Along with indicators on retail there will be numbers on the labor market and manufacturing. At 10:00 AM ET (14:00 GMT), the Labor Department will release its March Job Openings and Labor Turnover Survey (JOLTS). Job openings, voluntary quits and hires will likely have dropped sharply.


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At 8:30 AM ET, the New York Fed will release its measure of manufacturing in the region. The May Empire State Manufacturing Index is seen coming in at -63.50, up slightly from -78.20 in April. And at 9:15 AM ET, April numbers on industrial production and capacity utilization arrive.


3. Oil Rig Count Likely to Dip Again
Oil prices settled higher thanks to some optimism on demand from the Paris-based International Energy Agency (IEA). The specter of negative prices has receded as a drop in total U.S. crude stockpiles and inventories as the Cushing, Okla. hub eased the pressure of storage constraints.

Investors will get another glimpse of how production is faring tomorrow when Baker Hughes issues its measure of rig activity. Last week the oil rig count dropped to 292, the first time it had fallen below 300 since the Great recession.





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COVID-19 to Cause 17% Unemployment in June

U.S. unemployment is expected to hit 17% in June as the economy contracts due to efforts to contain the coronavirus pandemic, economists predicted, and the economy is expected to start rebounding in the second half of the year.

A monthly Wall Street Journal survey found economists expect gross domestic product to shrink 6.6% this year, measured from the fourth quarter of 2019, a downgrade from the 4.9% contraction economists predicted in last month’s survey. While economists expect a deeper contraction in the second quarter, a majority—85%—continue to expect the recovery will start in the second half of the year. They predict an annualized growth rate of 9% in the third quarter, up from 6.2% in the prior survey. Growth is expected to clock in at 6.9% in the fourth quarter, up slightly from last month.


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“The trough will occur in May or June, with activity starting to pick up,” said Chad Moutray, chief economist for the National Association of Manufacturers. “With that said, growth will remain well below pre-recessionary levels likely until at least 2022.”

Business and academic economists in this month’s survey expect, on average, that gross domestic product will contract at an annual rate of 32% in the second quarter. That represents a worsening from the April survey of economists, when they expected GDP to shrink 25% from April to June. The annualized rate, however, overstates the severity of any drop in output because it assumes that one quarter’s pace continues for a year.

In the May survey, 68.3% of economists said they expect the recovery to be shaped like a “swoosh.” Named after the Nike logo, it predicts a large drop followed by a gradual recovery. The survey results echo recent comments by corporate executives.

As states start to loosen stay-at-home orders, economists were split on whether this is the right moment to do so. Some 29.8% said the reopening measures are happening at the right time. 14% said such measures were overdue, while 31.6% described it as too soon. Just under a quarter, 24.6%, were unsure whether the timing is right.

“In the absence of a vaccine or some therapeutic drug, opening the economy now would certainly trigger a spike in new infections and will be followed by economic shutdown 2.0,” said Bernard Baumohl, chief global economist at The Economic Outlook Group, who currently views the reopening as premature.

Federal Reserve Chairman Jerome Powell received good grades for his performance as Fed chair during the coronavirus pandemic, with 71.9% of economists assigning him an A grade, while 24.6% gave him a B. Just 1.8% gave him a C and F respectively.



“Like a good engineer, [Mr. Powell] opened the floodgates to drain the reservoir in advance of an impending flood of demand for liquidity,” said Georgia State University economist Rajeev Dhawan.

The grades marked an improvement from December, when 63.8% of economists gave Mr. Powell a B. Seventeen percent assigned him an A grade and 14.9% gave him a C.

To fight the coronavirus pandemic, U.S. central-bank officials cut rates to near zero, purchased huge quantities of government debt and began lending to American businesses.

Those purchases of debt are expected to get bigger. Economists project the central bank’s portfolio of bonds, loans and new programs will swell to $7.74 trillion in June from less than $4 trillion last year. The portfolio stood at $6.72 trillion on May 4.

Economists see the Fed’s balance sheet swelling to $9.29 trillion by December, $9.63 trillion by December 2021 and $11.27 trillion by December 2022. In that range, the portfolio would be more than twice the size reached after the 2007-09 financial crisis.



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Stock Markets Fell on Thursday as Worries Grew About a Second Wave of Coronavirus Infections

Stock markets fell and bonds were in demand on Thursday as worries grew about a second wave of coronavirus infections and a dour assessment from the head of the U.S. Federal Reserve dashed hopes for a quick economic recovery.

“The path ahead is both highly uncertain and subject to significant downside risks,” Fed Chair Jerome Powell said in a webcast speech.

He warned of a recession worse than any since World War Two, and called for additional fiscal spending to stem the fallout from the pandemic – a pointed comment from a central banker who has avoided giving advice to elected officials.



New outbreaks in South Korea and China were cause for concern, even as more countries begin to re-open their economies after lengthy lockdowns.

European stock futures were down, and every market in Asia fell. Bonds and the dollar held ground won overnight.

FTSE futures (FFIc1) and EuroSTOXX 50 futures (STXEc1) dropped about 0.5%, while futures for the S&P 500 (ESc1) struggled to lift much above flat.

MSCI (NYSE:MSCI)’s broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) fell 1%.

“We don’t think the market is going to re-test the lows, but it’s probably seen its best also, so I’m expecting a correction,” said Tony Huntley, chief investment officer at Melbourne-based fund manager Adansonia Capital.

“The issue is whether we get a second wave (of infections) … that would be my greatest fear.”

China has re-imposed movement restrictions near its borders with North Korea and Russia after a new outbreak was detected there and South Korea is working to contain an outbreak centred around bars and nightclubs in Seoul.

“It is important to put this on the table: this virus may become just another endemic virus in our communities, and this virus may never go away,” WHO emergencies expert Mike Ryan told an online briefing on Wednesday.

Bonds and the dollar rallied after Powell talked down the prospect of negative interest rates in the United States, and extended gains on Thursday. Yields on benchmark U.S. 10-year Treasuries (US10YT=RR) fell slightly to 0.6395%.

A surprise drawdown of U.S. inventories helped oil prices make meagre gains, but the bleak outlook capped rises.

Gold pulled back from a one-week high hit early in the Asian session, but held comfortably above $1,700 an ounce at $1,711.20.

Markets are looking ahead to the release of the European Central Bank’s latest economic bulletin at 0800 GMT and the latest U.S. jobless claims data at 1230 GMT.

SLOW GOING…

Equity markets have wavered since April’s rally as investors and authorities try to weigh the risks of re-starting economies quickly against the financial ruin that lockdowns have wrought, while worrying about a flare-up infections.

Australian jobless data bought the latest sign of doom, with a record plunge in employment dragging the currency to a one-week low of $0.6420.

Already bleak expectations and strong demand for Aussie bonds kept it from steeper falls. In the United States, the Trump Administration is pressing on with re-opening plans despite urgings of caution from medical experts.

“We’re going to slowly open the economy,” U.S. Treasury Secretary Steven Mnuchin told Fox News on Wednesday.

“But there is also a risk that we wait too long, there is a risk of destroying the U.S. economy and the health impact that that creates.”

Caution is also prevailing in Europe and the Antipodes, where restrictions are beginning to relax. “Global markets are still licking their wounds, and while equities remain robust, gains are slowing,” said Societe General FX strategist Olivier Korber.

“A second pandemic wave is unfortunately not a tail risk, so the full extent of the economic damage may be underestimated,” he said, recommending a long position in euro/kiwi (EURNZD=) which has gained nearly 9% this year as market volatility has increased.


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Elsewhere a strong greenback pushed the kiwi to a three-week low of $0.5968 and had the euro and pound under pressure. Brent crude (LCOc1) firmed slightly to $29.36 per barrel and U.S. crude (CLc1) was up 1% at $25.58 per barrel.



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Federal Reserve Warns Of A Possible Sustained Recession From Pandemic

Federal Reserve Chair Jerome Powell is warning of the threat of a prolonged recession resulting from the viral outbreak and is urging Congress and the White House to act further to prevent long-lasting economic damage.

The Fed and Congress have taken far-reaching steps to try to counter what is likely to be a severe downturn resulting from the widespread shutdown of the U.S. economy. But Powell warns that there still could be widespread bankruptcies among small business and extended unemployment for many people.


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“Deeper and longer recessions can leave behind lasting damage to the productive capacity of the economy,” the chairman says in prepared remarks before an online discussion with the Peterson Institute for International Economics. “Avoidable household and business insolvencies can weigh on growth for years to come.”

The U.S. government “ought to do what we can to avoid these outcomes, and that may require additional policy measures,” Powell says.



He says the Fed will “continue to use our tools to their fullest” until the viral outbreak subsides but gives no hint of what the Fed’s next steps might be.

Powell repeats his previous warnings that the Fed can lend money to solvent companies to help carry them through the crisis. But a longer downturn could threaten to bankrupt previously healthy companies without more help from the government.


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Greater support from government spending or tax policies “could be costly, but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery,” he says.



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Economic Indicators – Coronavirus Lockdowns Trigger Big Drop in Consumer Prices


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The coronavirus pandemic pushed down April consumer prices by the most since the last recession as efforts to contain the virus disrupted demand for energy, travel, clothing and other goods and services.

The Labor Department said the consumer-price index fell by 0.8% last month, the second month in a row prices have eased since the pandemic reached the U.S. and the biggest drop since 2008. Business closures and stay-home orders aimed at containing the virus have created cheap oil, and falling prices for air travel, clothing, car insurance and other goods and services.

Excluding the volatile food and energy categories, so-called core prices decreased 0.4%, the largest monthly drop in records dating to 1957. While the month-to-month drops in inflation notched records, annual prices only reached the lows of the last expansion. Overall prices were up 0.3% from a year earlier, the lowest since 2015, and core prices were 1.4% higher from a year ago, the lowest since 2011.

Economists expect the decline in prices to be short-lived, with costs firming up as the U.S. reopens its economy and demand increases. Most don’t think the U.S. is likely to see price softness turn into a worst-case scenario as an extended period of deflation—when there are so many idle economic resources that businesses and workers are forced to lower prices and wages to generate demand for their goods and services.



“With economic activity beginning to open up, even if in a halting manner, while prices may slip further, they are unlikely to do so to nearly the extent seen in April,” said Richard Moody, chief economist at Regions Financial Corp.

A weak economy and softening inflation has had some investors betting the Federal Reserve will turn to negative interest rates to help boost growth. But some central bank research shows negative rates, adopted in other countries, have pushed inflation expectations lower, and Fed officials have concluded the tool’s costs outweigh uncertain benefits.

The Fed’s preferred inflation gauge is the personal-consumption expenditures price index, which has tended to run a little cooler than the CPI. The two generally move in the same direction, though measurement differences might produce a larger difference than usual now.

Lately, energy prices are the biggest drag on both. The Labor Department’s index for gasoline prices tumbled 20.6% in April from the prior month.

As recently as January, a barrel of U.S. oil cost more than $60. On April 20, U.S. crude futures for delivery the following month fell below $0 a barrel for the first time in oil market history. The coronavirus killed demand for fuel. A price war between Saudi Arabia and Russia alongside broad overproduction added to the oil glut.

One area where the pandemic is pushing prices higher: food.

The price index for food at home posted its largest monthly increase since February 1974. Americans stocked up at the pandemic’s outset. Since then, outbreaks have forced meat-processing plants to close and otherwise snarled supply chains. The April price index for meats, poultry, fish and eggs increased 4.3% from a month earlier.

Fed officials will look past oil markets and food costs to focus more on core prices. At least for now, coronavirus-related developments are pushing those lower. Indexes for apparel, auto insurance and airfares all posted their largest monthly declines on record.

“The fallout from the coronavirus has a large disinflationary effect on prices due to the large demand shock, plunge in oil prices, and strong dollar,” said Kathy Bostjancic, an economist at Oxford Economics. “A surge in inflation is the least of our worries.”

One reason deflation may not become an issue is government action to limit the impact of the virus’s disruption. The Fed and U.S. Treasury are pumping trillions of dollars into the economy, and many economists expect a sharp, short recession followed by a slow recovery.

A New York Fed survey out Monday found consumer inflation expectations for the next year and three years increased slightly—both now stand at 2.6%. “Respondents, however, increasingly disagree about the future path of inflation,” the survey said.

The market outlook appears less anchored. Yield movements in the Treasury inflation-protected securities, or TIPS, market show that compensation for inflation expected in five years, after the temporary impact of lower oil prices has faded, fell sharply in March before rebounding slightly, albeit at historically low levels.

Fed officials believe that consumer and market expectations for inflation affect behavior, becoming almost a self-fulfilling prophecy.

Another, longer-term concern is that large amounts of government borrowing and rising costs of doing business could push inflation uncomfortably high. Low rates and government deficits spurred consumer-price inflation after World War II and during the 1970s.

But with the loss of 20.5 million jobs and unemployment hitting a post-World War II high in April, the focus is more immediately on building a fiscal and monetary bridge until the coronavirus is contained.


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“In the near term it’s more likely, we think here at the Dallas Fed, we’ll have disinflation,” Dallas Fed President Robert Kaplan said earlier this month. “That’ll be in the shorter run, the next year or two. I do worry about, as we get back over the next few years to full capacity, with some of this stimulus and the size of the Fed’s balance sheet, do we start creating inflationary pressures? But that’s not going to be for two or three years.”





Oil Prices Boosted By Saudi Arabia Pledge To Deepen Output Cut

Oil futures rose on Tuesday, boosted by an unexpected commitment from Saudi Arabia to deepen production cuts in June in a bid to help drain the glut in the global market that has built up as the coronavirus pandemic crushed fuel demand.

Brent crude (LCOc1) futures advanced 0.5%, or 15 cents, to $29.78 at 0500 GMT, after hitting an intraday high of $30.11 a barrel.

U.S. West Texas Intermediate (WTI) crude (CLc1) futures were up 1%, or 26 cents, at $24.40 after touching an intraday high of $24.77.


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Saudi Arabia said overnight it would cut production by a further 1 million barrels per day (bpd) in June, slashing its total production to 7.5 million bpd, down nearly 40% from April.

“This reduction in production provided excellent optics encouraging other OPEC+ members to comply and even offer additional voluntary cuts, which should quicken the global oil markets’ rebalancing act,” Stephen Innes, chief global market strategist at AxiCorp, said in a note. OPEC+ is a group comprised of members of the Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russia.

The United Arab Emirates and Kuwait committed to cut production by another 180,000 bpd in total. Kazakhstan has also ordered producers in large and mid-sized oil fields including Tengiz and Kashagan to cut oil output by around 22% in the May to June period.

Still, the moves to deepen cuts raised questions for some about why the further cuts were needed.

“It was so sudden and so significant, it was just seen as: ‘Is this a proactive policy or just a reaction to weak demand?'” said Vivek Dhar, Commonwealth Bank’s mining and energy economist.



The cuts, combined with the world’s biggest economies relaxing coronavirus restrictions and stoking a gradual recovery in fuel demand, are expected to ease pressure on crude storage capacity.

However, in the wake of new outbreaks of the coronavirus, including in China and South Korea, the market is wary of a second wave of COVID-19 cases spurring renewed lockdowns.

Data showing China’s April factory prices fell at the sharpest rate in four years also added to investor jitters as it revealed weak industrial demand.

“On the demand side there’s probably a view that the worst may be behind us, in terms of the peak damage point. If we do see a second wave, that would hurt demand and hurt pricing,” said Commonwealth Bank’s Dhar.

Inventory data this week will be key to extending the recent rally in oil prices, analysts said.


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U.S. crude inventories likely rose by about 4.3 million barrels in the week to May 8, a preliminary Reuters poll showed, ahead of reports from the American Petroleum Institute industry group on Tuesday and the U.S. Energy Information Administration on Wednesday.



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International Energy Agency Forecasts The Biggest Decline In Electricity Consumption Since The Great Depression

Pandemic Sparks Slump in Electricity Prices.



Wall Street trading floors have emptied. Spring has arrived north of the equator. Oil and gas markets have cratered. The result is a precipitous decline in electricity prices in the U.S., Europe and parts of Asia.

Closures of office blocks, shops and factories have throttled power demand, dwarfing the amount of electricity required to work from home. Globally, the International Energy Agency expects the biggest decline in electricity consumption since the Great Depression. It is as if Germany and France were both turned off for the year.

In the U.S., the drop has been most severe in New York City, center of the nation’s epidemic and home to a services sector that usually devours electricity. Wholesale power prices averaged $16.57 a megawatt-hour in the first six days of May, according to S&P Global Platts, down by more than a quarter from the start of the 2020.

Electricity trades in much the same way as raw materials like oil. In much of the U.S., power-plant owners sell electricity to utilities in a competitive wholesale market overseen by regional operators. Utilities then distribute power to customers. Both power companies and utilities protect themselves against price swings with futures, which investors use to bet whether the market is going up or down.

A key difference between electricity and oil is that power is hard to store. When there is too much to go around, particularly on windy days in places like Northern Europe, producers sometimes pay to give power away. U.S. crude futures behaved like electricity when storage space for oil dwindled in April, dropping below $0 a barrel for the first time.

In Europe, negative electricity prices have become commonplace. In auctions for the joint Germany-Luxembourg market on the European Power Exchange, prices turned negative five times in the year through April, more than all of 2019.

The crunch is shifting the math of electricity production in favor of renewable energy sources. Coal plants, among the costliest to run in the U.S., typically deliver bursts of power to the grid when demand increases. Much of that electricity isn’t needed right now. Forty percent of the world’s electricity could be generated from low-carbon sources—nuclear, wind and solar power, plus other renewables—this year, according to the IEA. That would be the highest level on record.



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Electricity prices were falling before the pandemic due to a surfeit of cheap natural gas, said Paul Cusenza, chief executive of Nodal Exchange, which runs a market for power futures. A 30% drop in U.S. gas prices over the past year—accelerated by the recent crash in energy markets—has pushed electricity prices down.

“Less demand, more low-cost generation and cheap gas,” said Dan Eager, principal analyst for European power at Wood Mackenzie. “You add that together and you have very, very low prices.”

Electricity takes an intricate route from the station where it is generated to the device it powers, hurtling down a 160,000-mile network of high-voltage cables that crisscross the U.S. before traveling to consumers along one of millions of low-voltage lines.

Wholesale prices are largely set a day ahead of time. Regional authorities forecast how much electricity will be needed at every hour the following day, based on factors like the weather. Producers bid to generate that power. Smaller trades take place on the day itself, fine-tuning supply to meet demand.

A bump in prices that takes place each weekday morning as New York City gets to work now comes an hour later, and is less pronounced, because offices aren’t opening at the same time. The city’s electricity prices were less than half their average for the time of year at the end of April, according to Nodal Exchange.

Electricity usage has started to creep higher in states that are relaxing restrictions. Still, mainland U.S. demand was 5% lower in early May than it would have been without quarantine measures, said Platts analyst Manan Ahuja.

The world will consume 5% less electricity this year than in 2019, the IEA forecasts. That is eight times the size of the decline that took place during the 2009 financial crisis. It equates to more than 1,000 terawatt-hours in lost demand, enough to power France and Germany combined.

Electricity prices normally fall in spring, before rising when air conditioners are turned on for the summer. The coronavirus shutdown has exacerbated that seasonal slump, slashing New York City’s electricity demand by 14%, according to the New York Independent Service Operator, which runs the state grid.


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“There’s still a very, very large number of [coronavirus] cases in New York City,” said Richard Dewey, president and chief executive of the NY-ISO. “I don’t anticipate the demand going up very much, at least not measurably, for probably a few weeks.”




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Global Economic Downturn – Today’s Downturn Is Comparable In Scale To That Of The 1930s

News stories often describe the coronavirus-induced global economic downturn as the worst since the Great Depression. This is likely to be literally true. Yet for many, the comparison does more to terrify than clarify. Economists say there is likely to be a big difference between a downturn that is the worst since the Depression and conditions as bad as the Depression.

“I don’t find comparing the current downturn with the Great Depression to be very helpful,” said former Federal Reserve Chairman Ben Bernanke, who has studied that 1930s era. “The expected duration is much less, and the causes are very different.”

The trajectory of the pandemic and economy remains uncertain. How quickly health officials can contain the crisis, how much the public will cooperate and whether policies will spark a swift recovery remains to be seen. Even so, many economists find a scenario rivaling the Great Depression in severity and duration hard to imagine.

“The breakdown of the financial system was a major reason for both the Great Depression and the 2007-09 recession,” Mr. Bernanke said. Today, however, “the banks are stronger and much better capitalized.”

By most estimates, the current downturn is likely to be comparable in scale and duration to that 2000s recession and the other major post-World War II recession, in the early 1980s.



Comparisons with the Depression are difficult because most of the data sets collected today didn’t exist in the 1930s. But some rough measures are available, including global trade tallies from the League of Nations, Federal Reserve data on factories and Works Progress Administration records on joblessness.

In the 1930s, industrial production fell by more than half. Production slowly made up ground for almost four years, only to decline sharply again in 1937-38. By contrast, production declined by about 15% in 2007-09 and 10% in the early 1980s.

When the coronavirus hit, industrial production had already been dipping as a result of the recent trade wars. While many factories closed as consumer demand shrunk, some are rapidly retooling. Auto makers General Motors Co. and Ford Motor Co., for example, have switched from making cars to ventilators. Medical-supply factories are struggling to keep pace with demand.

From 1929 to 1933, the economy shrank for 43 consecutive months, according to contemporaneous estimates. Unemployment climbed to nearly 25% before slowly beginning its descent, but it remained above 10% for an entire decade.

That compares with a 16-month decline in the early 1980s and an 18-month fall from 2007 to 2009. This time, many economists believe a rebound could begin this year or early next year if the virus is sufficiently contained.

While unemployment in the U.S. hit 14.7% in April and is likely to rise further, the blow today is softened by safety-net programs such as unemployment insurance.

“Many people are suffering now, and the economy won’t recover in only a quarter or two,” Mr. Bernanke said. “But if we’re able to get reasonable control of the virus, the economy will substantially recover, and this downturn should be much shorter than the Great Depression.”

The second quarter of 2020 is likely to be the worst ever for many economies. The median estimate of economists surveyed by The Wall Street Journal calls for a decline of 25% at an annual rate in the U.S. Some estimates are closer to 50%.

But annualized rates can be misleading. They assume that one quarter’s pace continues for a year. If 10% of the economy shuts down for one quarter, that would be considered a 40% decline at an annual rate.



“We’ve had this very abrupt, very sharp, immediate reduction in economic activity, driven by government policies to shut down economies. And because it’s very abrupt, the numbers are astronomical,” said Douglas Irwin, a professor at Dartmouth College who has studied U.S. trade policy during the Depression.

By contrast, he said, “The way the world evolved into the Great Depression was a slow and steady decline. It was a slow strangulation of the economy.”

As in the Depression, today’s collapse is global. But the scale is smaller, Gita Gopinath, chief economist at the International Monetary Fund, said in a briefing last month. The IMF estimates the world economy shrank about 10% during the Great Depression, versus an expectation of about 3% this year and an expected return to growth next year. Advanced economies shrank about 16% in the Depression, compared with about 6% forecast for this year.

A series of severe policy mistakes around the world exacerbated the length and severity of the Great Depression. Central banks tightened monetary policy to maintain the gold standard, which no longer exists. The result was severe deflation, which increased the value of debt and lowered incomes.

Governments also initially cut spending in reaction to declining revenue. And as economies deteriorated, countries raised trade barriers in an effort to protect their domestic industries. The result, though, was a global contraction in demand, which only deepened the depression.

This time, central banks around the world quickly slashed interest rates and deployed programs to prop up credit markets. Governments approved massive spending measures, including the roughly $2 trillion stimulus in the U.S., to help keep businesses afloat and protect jobs. And they haven’t raised trade barriers in response to the pandemic.

“I’m not going to say that everything in the policy is right, but we understand that delay worsens the economic outcomes,” said Catherine Mann, global chief economist at Citigroup.



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Financial Markets – Top 5 Things To Watch This Week

This week’s economic calendar is packed with data which will further demonstrate the extent to which the coronavirus pandemic has hit global growth. The U.S. is set to publish figures on retail sales and industrial production for April, while the UK and Germany are to release data on first quarter GDP.

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The data will fuel the debate on whether a rebound in the U.S. stock market is justified amid an unprecedented slowdown. Trade threats by U.S. President Donald Trump against China continue to be a source of worry for investors at a time when large swathes of the economy are at a near-standstill. Meanwhile, bitcoin is due to undergo the third halving in its 11-year history this week. Here’s what you need to know to start your week.


U.S. data to underline steep drop-off in economic activity
Data on U.S. retail sales and industrial production for April due on Friday will further highlight the effect of closures on sales and factory output. Economists are expecting retail sales to have tumbled 11.6%, surpassing the record drop of 8.4% in March. Industrial production, which slipped 5.4% in March, is forecast to fall 11.5%.

There will also be numbers related to consumer sentiment and inflation while Thursday’s weekly report on initial jobless claims will cover the eighth week since widespread lockdowns came into effect. Last Thursday’s report showed that claims topped 3 million for a seventh straight week, but were off the peaks of 6.8 million seen in the week ended March 28.

Investors will also be watching a speech on Wednesday by Federal Reserve Chairman Jerome Powell on current economic issues at a webinar organized by the Peterson Institute for International Economics.

Trump’s trade threats
U.S.- China trade tensions look set to continue to simmer after Trump told Fox News Channel on Friday that he was “very torn” about whether to end the Phase-1 trade deal with China.

Trump’s administration is weighing punitive actions against Beijing over its early handling of the coronavirus outbreak, including possible tariffs and shifting supply chains away from China.

Trump has said he would terminate the trade deal if China fails to meet its purchase commitments. He said on Wednesday that he would know within a week or two whether that was possible.

The deal, which calls for Beijing to boost its purchases of U.S. goods by $200 billion over two years, only took effect on Feb. 15 as the coronavirus pandemic was unfolding. Lockdowns aimed at stemming the spread of the virus dealt a sharp blow to the Chinese economy and it is just now starting to recover.



UK and German GDP to show initial virus impact
First quarter GDP numbers from the UK and Germany will give investors an initial sense of the economic fallout from the lockdowns which began in late March.

The UK economy is expected to contract 2.5%, but the full damage, taking in the second quarter, will be much worse. The Bank of England said last week it expects the UK economy to fall by 14% this year, its worst annual slump for more than 300 years, and the unemployment rate to reach 8% as the coronavirus crisis ravages the economy.

Meanwhile, the euro zone’s largest economy Germany is expected to shrink 2.1% in the three months to March and the government has said it expects an annual contraction of 6.3% this year, which would be the most since World War II.

Divide between U.S. stock market, economy to widen
Recent economic data pointing to historic drops in activity is concerning to investors who worry that unprecedented stimulus from the Federal Reserve and U.S. government have led markets to shrug off the economy’s massive slowdown.

The Labor Department reported Friday that the U.S. economy lost a staggering 20.5 million jobs that month, the steepest plunge since the Great Depression.

If economic data this week is worse than the already awful forecasts it could bolster the argument that the rally in stocks has gone too far. But it is too early to say whether it will derail a surge which saw stocks post their best monthly gain in three decades in April, despite weak economic data from the previous month.

Recent gains could fade if U.S. states need to unwind efforts to reopen their economies and unemployment fails to decline in coming months.

Bitcoin’s third ‘halving’
Investors are widely anticipating Tuesday’s bitcoin halving, the third in the digital currency’s 11-year history. The previous two bitcoin halvings propelled massive rallies in bitcoin’s market value, but there is a wildcard this time in the form of the coronavirus pandemic, some analysts said.



“From an efficient market perspective, any fundamental reaction to the halving should be heavily priced in at this point; after all, it’s hard to imagine a more predictable event than an unalterable supply reduction that has been scheduled for more than a decade in a liquid, heavily-traded … asset,” said Matt Weller, global head of market research at GAIN Capital.

Bitcoin’s technology was designed in such a way that it cuts the reward for miners in half every four years, a move meant to keep a lid on inflation.

In the run-up to this week’s halving, bitcoin had surged almost 40% since the beginning of the year and climbed more than 80% from its lows.



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Global Stock Markets Mixed As Investors Weigh Economic Reopening


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World markets were mixed as investors gauged the possible effects of easing lockdowns to combat the coronavirus.

S&P 500 futures rose 0.8% ahead of the opening bell Wednesday, while the Stoxx Europe 600 benchmark was broadly flat. China’s Shanghai Composite gained 0.6% on its first trading day since Thursday, after a five-day holiday.



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South Korea’s Kospi Composite rose 1.8%. Australia’s S&P/ASX 200 was down 0.4%. Japanese stocks will resume trading Thursday.

Caroline Yu Maurer, head of greater China equities at BNP Paribas Asset Management, said consumption inside China was showing signs of improvement, but a bigger question for investors in the country’s shares would be the pace and extent of recoveries in the U.S. and Europe.

“If overseas consumption resumes to normality in the next couple of months, then the drag on China exports can be manageable,” Ms. Maurer said.

“The direction for China equities remains murky for the next couple of quarters. The concern is whether there will be global resurgence [of the virus] in autumn and winter,” she added.

Cliff Tan, East Asian head of global markets research at MUFG Bank, said infections could resurge as lockdowns ease, but this scenario hadn’t been factored into markets much.

He said while central-bank support meant stocks were unlikely to fall back to their March lows, they could possibly approach those levels. On the other hand, he said Asian currencies could rally in the third quarter if data showed the pandemic was under control.

The Trump administration is considering disbanding the White House’s coronavirus task force, officials said, despite the virus’s spread around the country.


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The onshore Chinese yuan, resuming trading after holidays, weakened nearly 0.4% against the dollar. The WSJ Dollar Index, which tracks the dollar against 16 currencies, was unchanged, while the Japanese yen firmed 0.2% against the greenback.

Oil futures retreated slightly, after jumping Tuesday. Prices for June delivery of West Texas Intermediate, the U.S. benchmark, fell 0.65% to $24.42 a barrel. The global equivalent, Brent crude, declined 0.6% to $30.78.

The yield on the 10-year U.S. Treasury note rose to 0.662%, from 0.656% on Tuesday.




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3 Stocks To Watch In The Coming Week: Disney – General Motors – Tesla

After finishing its best month of gains in about three decades, the stock market started May on a sour note as sentiment turned negative on the worsening unemployment situation and increasing tension between the U.S. and China over the spread of coronavirus.

Millions more Americans filed for unemployment benefits last week, sending the six-week total above 30 million since the coronavirus pandemic began to shutter businesses across the country. With that huge economic cost, President Donald Trump threatened to slap tariffs on Chinese imports, blaming the Asian nation for misleading the world about the pandemic.

If Trump acts on his threat, that could again start a trade war between the world’s two largest economies, diminishing prospects for a quick economic recovery. All major U.S. benchmarks, including the S&P 500, Dow and NASDAQ, slumped about 3% on Friday.

In the coming week, we’ll still see a few big names from different sectors of the economy reporting their first-quarter numbers. Here’s what we’re watching:


1. Disney

The Walt Disney Company (NYSE:DIS) reports earnings for the fiscal 2020 second quarter after the closing bell on Tuesday, May 5. Analysts are expecting $18.05 billion in sales and $0.93 a share profit per share.

Disney Stock Price Today

With the entertainment giant’s theme parks closed all over the world due to COVID-19, Disney is expected to report earnings from resorts and consumer products fell by $500 million or more in the period.

The Burbank, CA-based company is also suffering on other fronts: there are no live sporting events for its ESPN network to cover and no theaters currently open where its movies can be shown. Film and TV production has shut down, and its cruise ships are docked.

Faced with these challenges in the coming quarters, Disney probably won’t have much positive news to provide and could avoid delivering future guidance. One bright spot could be the subscriber numbers on its newly-launched streaming service, Disney+ which is benefiting from the stay-at-home environment.

Shares have fallen 27% this year, closing at $105.50 on Friday, after a 2.5% decline for the day.


2. General Motors

General Motors (NYSE:GM) will report results for the first quarter before the market opens on Wednesday, May 6. The carmaker is expected to show $0.47 a share profit on sales of $32.09 billion.

Auto manufacturers are among the worst hit companies in this pandemic. Global lockdowns have forced them to close their plants, while at the same time sales have collapsed.

General Motors Stock Price Today

Last week, GM suspended its dividend and share buyback program as the largest U.S. automaker seeks to preserve cash. The moves announced Monday follow other cash-saving measures taken at the beginning of April, when the company deferred 20% of salaried workers’ pay, cut top executive compensation and put 6,500 employees on leave.

GM shares have plunged more than 45% this year, massively underperforming the benchmark S&P 500 which is down about 13% since the beginning of 2020. The stock fell more than 6% on Friday to close at $20.90.


3. Tesla

Investors in Tesla (NASDAQ:TSLA) are likely to face another volatile week. The electric carmaker’s shares plunged on Friday after its CEO, Elon Musk, said in a tweet that Tesla stock is too high.

Musk posted more than a dozen times in a span of less than a 75 minutes on Friday, claiming he’s selling “almost all” of his physical possessions and won’t own a house. He also renewed his call for reopening the U.S. economy.

Tesla Stock Price Today

It’s not the first time Musk has warned investors about the high price of his own stock. In the three most recent events, Tesla shares remained in the red one year out, while in the 2013 episode, Tesla plunged 30% in the following month. It eventually recovered over the one-year period, According to Baird Equity Research cited by CNBC.

Investors became more confident about Tesla this year, after the carmaker released a better-than-expected earnings reports, raising expectations that the company was in a stronger position to withstand the coronavirus-triggered slowdown. Shares of the Palo Alto-CA company fell more than 10% on Friday, closing at $701.32.





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Natural Gas Is Flaring Up

Rising Natural Gas Prices Are a Hot Bet…

Investors, who just weeks ago shunned the fuel and the companies that sell it, are unwinding wagers that prices will fall, bidding up producers’ beaten-down shares and even buying their new bonds.

The reason for optimism: The historic collapse in crude prices thanks to the new coronavirus has energy producers racing to close oil wells.

Shutting in productive wells in crude-drilling regions like North Dakota and West Texas not only keeps oil in the ground and off the flooded market, it also chokes off a lot of gas that is extracted as a byproduct. When crude prices last month dipped below $0, natural gas prices had their best day in more than a year, popping 9.75% on the prospect that many money-losing wells will be capped.


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Meanwhile, coal, not gas, has suffered the worst of the reduced demand for electricity during the pandemic. Coal’s share of U.S. electricity generation is down by about a third from last year, according to Energy Information Administration data.

The result is renewed interest from investors in natural gas and its producers.

Hedge funds and other speculators on April 21 became net long—with more wagers on rising gas prices than bets counting on decline—for the first time since last May, according to Commodity Futures Trading Commission data.

They added bullish positions this week. Though the difference between long and short bets is relatively small, it represents a dramatic shift in sentiment. Gas speculators were piled into their largest net short position on record in mid-February.



Since February, shares of Appalachian gas producers EQT Corp. and Range Resources Corp. have more than doubled while CNX Resources Corp. stock has gained 91%. The broader stock market has been down 4.2% over that same time, and the sector’s benchmark SPDR S&P Oil & Gas Exploration & Production exchange-traded fund has lost 19%. Over the past three months, Cabot Oil & Gas Corp., a top producer in Pennsylvania, has risen 45%, second best in the S&P 500 after Regeneron Pharmaceuticals Inc., which investors have banked on developing a Covid-19 treatment.

SunTrust Robinson Humphrey analysts raised price targets for shares of seven gas producers by an average of 69%. Tudor, Pickering, Holt & Co. recommended shares of EQT, Cabot Oil & Gas Corp. and Tourmaline Oil Corp. in Canada to capture near-term gains related to what the Houston firm estimates will be 6 billion to 7 billion cubic feet of gas a day leaving the market as oil wells are shut.

Debt investors are warming too. EQT’s bonds traded down to 61 cents on the dollar in March but are back up to near par. Last week, the Pittsburgh company launched a $350 million convertible bond offering that generated so much interest that it ended up issuing $440 million of debt, according to CreditSights, which upgraded its rating of EQT. CNX followed with its own offering this week of $300 million of debt that can be swapped for shares.

Natural gas futures for June delivery lost 3% on Friday to close at $1.89 per million British thermal units after climbing to $2.016 in early trading. That’s still too low for many gas wells to be profitable, yet the price is up 22% from the 25-year-low of $1.552 on April 2 and the trend is higher heading into summer, when there’s demand to power air conditioners, and more so in winter, when a lot of gas is burned for heat.

Futures for July delivery reached $2.25 Friday before giving up gains. December gas nosed briefly above $3.

“We think the dry gas producers are attractive,” said Mark Unferth, a portfolio manager at Alpine Capital Research, referring to companies that don’t produce much poorly priced oil and natural gas liquids. “We’ve been adding to our exposure the past six weeks and overall it’s about 5% of our portfolio.”

Companies like EQT and CNX, which make their money selling gas, had to rapidly lower operating costs to keep up with oil-drilling competitors that didn’t particularly care about the price of gas and flooded the market with it when crude prices were higher. As U.S. oil production surged to records, so did gas output. Appalachian gas producers had to adapt to prices first below $3 and then this past winter to less than $2.


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Those efficiency gains should translate to profits on even small improvements in gas prices, Mr. Unferth said.

“When gas prices were at $3.50 you could afford to be sloppy but low prices have forced people to be a lot more efficient in the field,” he said.




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EU Chief Backs Investigation Into Covid-19 Origin And Says China Should Be Involved

The president of the European Commission backed calls for an investigation into the origin of the new coronavirus and said China should be involved in the process.

Lawmakers in countries like Germany, Sweden and Australia have called for a probe into how the virus started, which has so far infected over 3.2 million people and killed over 230,000.

Speaking to CNBC, Ursula von der Leyen, the head of the EU’s executive arm, said she would like to see China work together with her organization, and others, to get to the bottom of exactly how it emerged.

“I think this is for all of us important, I mean for the whole world it is important. You never know when the next virus is starting, so we all want for the next time, we have learned our lesson and we’ve established a system of early warning that really functions and the whole world has to contribute to that,” she told Geoff Cutmore in an exclusive interview Thursday.

She called for more transparency in the future and said governments needed to learn lessons from the current crisis.

“One of the lessons learned from this pandemic is that we need more robust data, overall, and we need more centralized than an entity that is analyzing those data so that the early warning mechanism is way better,” she said.



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“For example, at the level of the European Union, we know that we need a more robust data system for such situations as we see it right now with the coronavirus. And for building up a system that is, that you can count on.”

China criticized
The new strain of coronavirus, known as Covid-19, was first reported in December in the Chinese city of Wuhan.

While China has deployed medics and sent equipment to nations struggling with the coronavirus overseas, the country has faced criticism over its own handling of the virus, which experts believe originated in a wildlife market, or wet market.

We did not cover up anything, and did not delay any efforts. Le Yucheng – CHINESE VICE PREMIER

In late January, Chinese authorities announced a temporary ban on the trade of wild animals in wet markets, supermarkets, restaurants and e-commerce platforms — but experts and wildlife organizations have called for a permanent ban to help prevent future pandemics.

China has also been criticized for a lack of transparency throughout the outbreak, amid claims that Beijing was too slow to respond. The WHO has cautioned against blaming individual countries for the spread of Covid-19, warning that pointing fingers at nations with a high number of cases could discourage accurate reporting on domestic outbreaks.

China has denied any wrongdoing. In an interview with NBC Tuesday, Chinese Vice Premier Le Yucheng said: “China has been open, transparent and responsible in its Covid-19 response. We did not cover up anything, and did not delay any efforts. We have already publicized the timeline of how we have shared the information on Covid-19.”

Le Yucheng added that there is no international law that supports blaming a country simply for being the first to report a disease. “Neither does history offer any such precedent,” he said.







In the United States, President Donald Trump said Thursday, without offering any evidence, that he has a high degree of confidence that the coronavirus outbreak originated from a laboratory in China. His comments came after the top spy agency in the U.S. said that the country’s collective intelligence community did not believe the virus was manmade or genetically modified.

EU-China relations
When pressed on whether a probe could lead to a weakening of relations with China, von der Leyen disagreed that this would be the case: “No, I don’t think so, because it’s all on our own interest. I mean, this this pandemic has caused so much damage,” she told CNBC.

“So it’s in our own interest, of every country, that we are better prepared the next time. We will, we do not know when such a crisis occurs again, but we should be better prepared now.”

Her comments come at a time when the European Commission has been under pressure for allegedly softening the tone of a disinformation report around the coronavirus. The institution has denied succumbing to pressure from Beijing, but its foreign policy chief, Josep Borrell, has not denied that China had expressed concerns about the report, Politico reported.



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Global Markets – Sentiment Improves After Promising News On A Coronavirus Treatment And Fed Assurances On Lasting Economic Support

Stocks rose Thursday, following a rally in U.S. markets on Federal Reserve assurances it will continue with its stimulus programs and on promising news on a coronavirus treatment.

S&P 500 futures inched up 0.5%, suggesting U.S. markets could open higher. In Europe, the pan-continental Stoxx Europe 600 added 0.6%.

Stock benchmarks in China and Japan rose. The Shanghai Composite Index closed up 1.3% and Japan’s Nikkei 225 ended 2.1% higher. Markets in Hong Kong and South Korea were shut for a holiday.

Sentiment was boosted Wednesday by news from Gilead Sciences that a clinical trial evaluating its drug remdesivir in coronavirus patients had concluded with a positive result.

The Federal Reserve left interest rates unchanged, near zero, and didn’t announce any new measures at the close of a two-day policy meeting. However, it pledged to use “its full range of tools to support the U.S. economy in this challenging time.”

“There’s a good chance that the Fed will put in place more quantitative easing programs in the future and stay committed to keeping interest rates low for some time longer,” said Eli Lee, head of investment strategy at Bank of Singapore. He expects the near-zero interest rate to continue for the next two to three years.

Since mid-March, the Fed has bought nearly $2 trillion in Treasury and mortgage securities, eclipsing any of its similar programs between 2008 and 2014. The major U.S. stock indexes have rallied between about 12% and 15% in April on the back of the supportive Fed actions.

“The rally is a bit too far and too fast,” said Mr. Lee. The poor economic data as indicated by a sharp 4.8% contraction in the U.S. economy for the first quarter of this year suggests things will get far worse before they get better, he added.

Ong Zi Yang, senior macro analyst at FSMOne.com in Singapore, said the V-shaped recovery of the markets has led to a disconnect between the financial markets and the economic realities.

“They will continue to diverge with the Fed pumping in so much money,” he said. But he cautioned such supportive measures could be damaging in the long run as a lot of companies that aren’t operating efficiently might be getting help they don’t deserve.

The U.S. has reported nearly 1.04 million infections and more than 60,900 deaths from the new coronavirus, according to Johns Hopkins University. Globally, more than 3.19 million people have been infected, and the death toll stands at more than 227,000.

China, the first to reopen its economy after emerging from the coronavirus crisis, reported a slower expansion in factory activity in April, after a strong rebound in March, due to weak external demand.

Brent crude, the global gauge of oil prices, jumped 5.5% to $25.57 a barrel while U.S. crude surged 10.4% to $16.63 a barrel. Fears have eased about the U.S. running out of storage space, after inventories didn’t climb as quickly as expected.

The yield on the 10-year U.S. Treasury note fell to 0.601%, before drifting up to 0.614% in early morning trading. Yields fall as bond prices rise.







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Shell Slashes Dividend For The First Time Since World War II


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Shares of Shell dropped to the bottom of the European benchmark during early morning deals, down more than 7%.

Oil giant Royal Dutch Shell on Thursday cut its dividend to shareholders for the first time since World War II, following a dramatic slide in oil prices amid the coronavirus crisis.

The board at Shell said it had decided to reduce the oil major’s first-quarter dividend to $0.16 per share, down from $0.47 at the end of 2019. That’s a reduction of 66%.

“Shareholder returns are a fundamental part of Shell’s financial framework,” Chad Holliday, chair of the board of Royal Dutch Shell, said in a statement.



“However, given the risk of a prolonged period of economic uncertainty, weaker commodity prices, higher volatility and uncertain demand outlook, the Board believes that maintaining the current level of shareholder distributions is not prudent.”

Shell also reported that net income attributable to shareholders on a current cost of supplies (CCS) basis and excluding identified items, which is used as a proxy for net profit, came in at $2.9 billion for the first quarter of 2020. That compared with $5.3 billion in the first quarter of 2019, reflecting a year-on-year fall of 46%.

Analysts polled by Refinitiv had expected first-quarter net profit to come in at $2.5 billion for the quarter.

Shares of Shell dropped to the bottom of the European benchmark during early morning deals, down more than 7%.

Last week, Norway’s Equinor became the first oil major to cut its dividend this earnings season. It raised concern that other energy giants may follow suit, although BP, which reported Tuesday, maintained its dividend.

Investors will now be watching U.S. oil majors Chevron and Exxon Mobil, which are both due to release results Friday.

Tamas Varga, senior analyst at PVM Oil Associates, told CNBC via email that Shell had taken the “same approach” as Norway’s Equinor by cutting its quarterly dividend by roughly two-thirds.

“As demand destruction bites, cash is king.” Varga said, adding that suspending share buybacks, slashing capital expenditure and reducing dividends were “becoming the norm.” Shell CEO Ben van Beurden described energy market conditions through the first three months of the year as “extremely challenging.”

“Given the continued deterioration in the macroeconomic outlook and the significant mid and long-term uncertainty, we are taking further prudent steps to bolster our resilience, underpin the strength of our balance sheet and support the long-term value creation of Shell,” he added.


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Alongside the cut to its dividend, Shell announced it would not continue with the next tranche of its share buyback program. Since the launch of the program, the oil major said it had bought back almost $16 billion in shares for cancellation.

“On the face of it, the dividend cut and cancellation of share buybacks may be seen by some shareholders as a negative move in the short term,” David Barclay, senior investment manager at Brewin Dolphin, said in an email.

“However, looking further ahead it could well prove to be the right step as Shell looks to strengthen its financial position and cut costs during a very difficult time.”

The energy giant’s results come shortly after a historic plunge in oil prices.

The May contract of U.S. West Texas Intermediate plunged below zero to trade in negative territory for the first time in history last week. Trading volume was thin given it was the day before the contract’s expiration date, but, nonetheless, the move lower was extraordinary.

WTI futures had fetched more than $60 a barrel at the start of the year. A dramatic fall-off in demand as a result of the coronavirus outbreak has sent oil prices tumbling.

On Thursday, the June contract of WTI traded at $16.55 per barrel, almost 10% higher for the session, while international benchmark Brent crude stood at $23.81, up around 5%.

Earlier this week, BP reported first-quarter net profit had fallen 67% compared to the same period a year earlier.







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Stock Market Today: Global Stocks Rise Ahead Of Powell’s Comments

Futures tied to the S&P 500 rose, suggesting the blue-chip index could open higher. The Stoxx Europe 600 wavered between gains and losses, as gains for shares in oil-and-gas companies offset losses for utility stocks.

Federal Reserve Chairman Jerome Powell’s comments on the prospects for the economy, when he holds a press conference at 2:30 p.m. ET, will be closely monitored by investors. His views on the tools and options available to the Fed if the situation deteriorates further will be of particular interest as the coronavirus pandemic triggers a pronounced contraction in global output. U.S. officials have largely ruled out experimenting with negative interest rates.



“They’ve done everything they feel they need to do right now,” said Jonas Goltermann, senior markets economist at Capital Economics. “The communication challenge is going to be conveying that they will do more if needed, but that doesn’t mean they have to do more right now.”

After cutting interest rates to near zero in mid-March, the Fed began a torrent of bond-buying programs to stabilize markets, while offering support to other corners of the market to bolster the availability of credit. These measures have helped stocks stage a rapid recovery in the face of a deep recession.

Investors will seek to learn how long the Fed expects the economic downturn to last, said Eddy Loh, senior investment strategist at Maybank Group Wealth Management.

The U.S. is also scheduled to release preliminary data on gross domestic product, a broad measure of the goods and services produced in an economy, at 8:30 a.m. The figures are expected to show the economy contracted in the first quarter. Second-quarter data, which won’t be released until July, are forecast to show a steeper decline.

Also Wednesday, a series of blue-chip companies are due to publish earnings for the first three months of the year, starting at about 6 a.m. General Electric, Spotify Technology, Boeing, Mastercard and Hasbro are due to release their reports before the market opens. Facebook, Microsoft, Qualcomm and Tesla will report after the close of trading.

Among European stocks, International Consolidated Airlines Group, owner of British Airways, fell almost 4% after starting the process of laying off more than a quarter of the carrier’s staff.

Wirecard fell 6.4%, extending a rout that began Tuesday, after a prominent activist investor called for the German financial-technology company to fire its chief executive.

Oil markets remained volatile. Brent crude, the global gauge of oil prices, climbed 3.7% to $23.57a barrel. Futures contracts that will deliver West Texas Intermediate in July, the benchmark for U.S. crude markets, rose 4% to $18.30 a barrel. A contract that will deliver crude in June jumped 14% to $14.04 a barrel. Investors have sold the June contract in recent days to avoid taking hold of physical barrels of oil at a time when storage space is running out.


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Asian stock benchmarks broadly rose. Australia’s S&P/ASX 200 closed 1.5% higher, while the Shanghai Composite Index inched up 0.4%. Hong Kong’s Hang Seng Index ticked up almost 0.3%. Japan’s market was closed for a public holiday.




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Crude Oil Volatile – Dysfunction In The Oil Market Intensified, Sending The Most Popularly Traded U.S. Oil Contract To A Fresh Low

Oil prices recovered some losses Tuesday after traders scrambled to avoid the worst of the damage wrought by volatile markets. The world is awash with too much oil at a time when coronavirus lockdowns on driving, flying and industrial activity has all but eliminated the need for the stuff.


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June futures contracts for West Texas Intermediate—the main U.S. bellwether—dropped nearly 20% and touched $10.24 a barrel before regaining ground to around $13.56 a barrel, up 6% on the day. Brent crude was up 2.9% at $23.72 a barrel. WTI traded at a massive difference to its European counterpart because of severe bottlenecks in storing oil in Cushing, Okla., where WTI contracts are settled.

The earlier drop in WTI briefly put it on track for the lowest closing level for an actively traded contract since at least 1986, according to data provider FactSet. WTI has only ever settled the day below $11 on six occasions, according to FactSet records, which stretch back to 1986. The last time was in 1998. The all-time low was March 31, 1986, when oil traded for $10.42.

A lightly traded futures contract for WTI traded for negative prices last week, spooking markets, and prompting investors to race out of contracts that require them to take delivery of oil in the coming months. Most oil watchers consider the most actively traded contract at any given time as the price that best reflects market conditions.

The selloff picked up steam Tuesday as investors sold the June contract and into ones that are tied to oil delivered in months down the road, said Giovanni Staunovo, commodity analyst at UBS’s Chief Investment Office.

“Everyone’s running out of the contract and they don’t want to be the last ones on the train, so that’s not helping prices,” Mr. Staunovo said.

S&P Dow Jones Indices said in a statement after Monday’s market close that it would remove the June U.S. crude contract during Tuesday trading hours from its widely followed indexes that track the oil market and switch to the July contract.

The move, which S&P said would include the S&P Goldman Sachs Com modity Index, comes earlier in the trading month than usual, and was “based on the potential for the June 2020 WTI Crude Oil contract to price at or below zero,” the index announcement said. BlackRock’s iShares S&P GSCI Commodity-Indexed Trust exchange-traded fund tracks that index and had around $400 million of assets as of April 27, according to the fund website.

BlackRock didn’t immediately respond to a request for comment.

That followed a decision by the United States Oil Fund —the largest exchange-traded fund that attempts to track oil prices—to sell its positions in the June contract and purchase positions in contracts several months away.

The crash in prices, and the dip into negative territory for the May contract last week, highlighted the dangers associated with holding oil futures that expire soon. Some WTI contracts require owners to take delivery of oil when the contracts expire. With oil tanks and pipelines full, some oil investors were forced to unload the right to collect that oil and pay the buyer to do so.



Many fear that negative oil prices could happen again. Prices on WTI contracts for July delivery have also come down in recent days to $18.99 a barrel. Contracts for delivery at the end of the year are at about $27 a barrel.

Government-imposed lockdowns aimed at preventing the spread of the coronavirus have suffocated global oil demand. Oil majors, frackers and national oil companies around the world have raced to shut off wells. A deal among major oil-producing nations to cut due to take effect Friday that will hold back approximately 13% of global supply.

But investors worry these measures won’t relieve the supply glut fast enough.

A lack of space to store oil onshore in the largely landlocked U.S. market has pushed WTI prices lower, said Bjarne Schieldrop, chief commodities analyst at SEB Markets. The hit to Brent prices, which are tied to oil produced in the North Sea, has been less severe. The Brent market is largely seaborne and space to store oil offshore remains. But as long as production continues amid weakening demand, space will run out, Mr. Schieldrop added.

“The final crunch point in time is still ahead of us,” he said. “Supply and demand will be forced to align meaning that production will have to shut down. That will be the final low point, but we are not there yet.”

Investors will keep a close watch on U.S. inventory data due out this week, with American Petroleum Institute stock-level data expected later Tuesday.




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UBS Reports Net Income Up 40% As Market Volatility Leads To Higher Trading Volumes


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UBS reported Tuesday a 40% increase in profit for the first quarter of 2020 on the year before, helped by higher trading volumes as market participants reacted to the volatility of recent months.

Net profit attributable to shareholders came in at $1.6 billion in the three months to the end of March, up from $1.1 billion in the same quarter of 2019.

Here are some other key metrics from the results:

Operating income came in at $7.9 billion versus $7.2 billion a year ago
Common equity tier 1 ratio (CET1) — a metric of bank solvency — was 12.8% versus 13% a year ago. Return on tangible equity — a metric of profitability — hit 12.8%, compared with 9.8% a year ago



“We saw a huge pick up in client engagement, despite the logistical challenges. We see that clients are more and more looking for advice,” Sergio Ermotti, UBS’s chief executive officer, told CNBC’s Squawk Box Europe.

Turbulence in the markets helped UBS’s investment bank post the biggest jump in operating profit, across the all the business divisions, on the year before. Operating profit before tax rose to $709 million from $207 million at the end of the first quarter of 2019.

Within investment banking, UBS attributed a 44% rise in revenue in its global markets division to “significantly higher volumes and volatility, particularly in Foreign Exchange, Rates and Cash Equities revenues, reflecting the impact of the COVID-19 pandemic on client activity levels.”

Its global wealth management division also increased its operating profit before tax over the last year to $1.2 billion from $863 million. However, invested assets fell to $2.3 billion.

Outlook
The results come at a time of significant pressure for banks, as the coronavirus pandemic has brought the global economy to a standstill.

The Swiss bank said the coronavirus had “dramatically changed the global economic outlook,” adding that it foresees disruption to many businesses and higher unemployment as a result. Given this, UBS is expecting higher levels of credit loss expenses for the financial sector.

Speaking to CNBC Tuesday, Ermotti said it was “very difficult to make predictions about any quarters going forward.”

“January, February and March were all profitable months,” he said, adding that the bank will seek to be “flexible” in dealing with upcoming challenges.

UBS said earlier this month that it will suspend half of its 2019 dividend payout until later this year, after pressure from Swiss regulator FINMA. The bank’s chief executive officer, Sergio Ermotti, said earlier this month that it was too early to discuss 2020 dividend plans.

UBS’s share price has dropped around 30% over the last 12 months. In February, the bank announced that Ralph Hamers will be taking over as chief executive officer on November 1.




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Pandemic Triggers A Wave of Distress, Bankruptcy In Corporate America

What a time to be a restructuring specialist.

Practically overnight, bankers and lawyers who advise companies in distress have become some of the most in-demand workers on Wall Street, ending a long period in which rising markets and abundant capital consigned them to obscurity.

Stay-at-home orders and the shutdown of nonessential business have driven broad swaths of the economy into panic mode. In industries that were already in a precarious position before the crisis, including retail and energy, the coronavirus pandemic has tipped many companies over the edge. A host of oil companies have sought chapter 11 protection, while J.C. Penney Co. JCP 3.69% and Neiman Marcus Group Inc. are expected to file for bankruptcy soon.



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Companies in areas that were previously stable, such as the automotive, travel and leisure industries—and even health care—may soon face similar pressures.

U.S. corporate debt downgraded to selective default, meaning a borrower has failed to meet one or more of its obligations, totaled $64.1 billion for the 12 months ended April 17, according to S&P Global Ratings. That represents only a slight uptick over the pace at the end of January, but the numbers are about to get a lot more bleak.

In the coming months, that figure could top the roughly $340 billion reached at the height of the financial crisis, according to the worst-case scenario estimates from S&P. Even in a less grim scenario, the figure could approach levels reached after the dot-com bust in the early 2000s.

Companies of all stripes are scrambling to avoid a painful reorganization of their capital structures and operations, default or bankruptcy. Many have tapped lines of credit and slashed costs. Some, such as Carnival Corp., Expedia Group Inc. and Airbnb Inc., have issued new equity or debt to public investors or private-equity firms.

For some, those efforts could tide them over until conditions improve. But should the recession prove deeper than envisioned, there could be a second—potentially bigger—wave of corporate distress later this year as companies labor under the weight of additional debt taken on during the shutdown, advisers warn.

“We will definitely see an uptick in defaults and an uptick in restructurings,” said William “Tuck” Hardie of Houlihan Lokey Inc., one of the top banks in restructuring. “The question is: Is it a 2,000-foot mountain or is it Mt. Everest?”



U.S. companies drew down about $230 billion from revolving credit lines from the beginning of March through April 9, according to an analysis by Goldman Sachs Group Inc. The largest portion—around 17%—went to companies in the automotive industry, with about 15% going to retailers and 10% to travel and leisure purveyors.

Those figures don’t include new revolver borrowings by companies without publicly traded bonds or those financed by private lenders, many of which are private-equity-backed and were already highly indebted.

Hard-hit companies have taken on additional debt on top of using their credit lines—and some may have effectively boxed themselves in by doing so. Carnival earlier this month sold $4 billion worth of senior secured notes backed by assets like its cruise ships. Tying up those assets will make it difficult for the company to go back to the debt market if it needs to raise more cash, according to a person familiar with the company’s capital structure.

Another person close to Carnival said the cruise operator believes it still has a number of financing options available to it if cruising doesn’t return by early next year, and it expects to get access to government-backed loans in some of the markets where it operates.

For private-equity-backed companies, which are typically bought using a heavy helping of debt and a relatively small amount of equity, having little to no revenue can be even more painful. Loans to fund new buyouts had average debt of 5.93 times earnings before interest, taxes, depreciation and amortization in 2019—the highest since 2007, when the average was 6.23 times, according to S&P Global Market Intelligence’s LCD.

Working in their favor is the fact that 85% of so-called leveraged loans issued in 2019 were “covenant lite,” giving borrowers more breathing room. That figure has risen steadily over the past decade as investors clamored for yield. In 2010, only 10% of leveraged loans were covenant lite, according to data compiled by J.P. Morgan Asset Management.



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Also backstopping companies owned by buyout funds: Firms have around $2 trillion in unspent cash to invest in private markets, with most of that dedicated to private equity, according to alternative-investments manager Hamilton Lane Inc. Much of the dry powder is in the hands of the biggest firms, however, and companies’ fate will be determined by their owners’ willingness to inject more capital at a time when future prospects are highly precarious.



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And the universe of companies facing distress stretches well beyond the world of private equity, said Steve Zelin, head of restructuring at investment bank PJT Partners. “It doesn’t matter if you were five times levered or two times levered prior to the current crisis if you are now not generating any revenue.”

Investment firms that specialize in distressed investing have been gearing up for more action. Oaktree Capital Group LLC aims to raise $15 billion for what would be the biggest-ever distressed-debt fund, according to a person familiar with the matter.

Apollo Global Management Inc. has already invested more than $10 billion since the beginning of March in credit and private-equity.

James Zelter, the firm’s co-president who heads its $200 billion-plus credit business, says he sees three phases of distress playing out.

The first occurred during the early days of market turmoil in March, when even the debt of companies unaffected by the virus was trading at big discounts. The second is the industry-specific declines that led to the rescue financing companies like Expedia have been receiving.

“The third phase is just beginning,” Mr. Zelter said.




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Global Stocks Rise As Countries Begin To Reopen Economies

Global stocks rose Monday, with investors anticipating that stimulus measures and the easing of coronavirus-lockdown measures in the U.S. and Europe may help kick-start economic activity.

Futures tied to the Dow Jones Industrial Average advanced 0.9%. Last week, the benchmark for U.S. blue-chip stocks posted modest losses, dropping 1.9% after a massive rally from late March to mid-April.

Japan’s Nikkei 225 stock index ended the day up 2.7%. The Bank of Japan scrapped its target for government-bond purchases and said it would nearly triple its holdings of corporate debt to aid fundraising by companies affected by the coronavirus pandemic.

European markets climbed as countries including Italy and Spain signaled that they may loosen restrictions in the coming weeks. The pan-continental Stoxx Europe 600 gauge rose 1.7%.

Italy announced a timetable for reopening its economy and restoring daily life beginning on May 4, but warned that a resurgence in cases could lead to a return of restrictions. Spain allowed children to leave their homes after six weeks under one of the strictest lockdowns in the world.



In the U.S., some states allowed retailers, salons and other businesses to reopen over the weekend as new infections appeared to slow.

“We don’t yet know the full scale and the pace of lockdowns being eased, but it’s important for confidence,” said Edward Park, deputy chief investment officer at Brooks Macdonald. “Suggestions that factories will restart sooner rather than later suggests that the pressure on economic output in the data we’ve seen will be a shorter-lived phenomenon.”

Concerns about sovereign debt from Europe’s most debt-laden countries also showed signs of easing. Italian, Spanish and Greek bonds rallied after S&P Global Ratings on Friday held off on downgrading Italy’s credit rating. The yield on Italy’s 10-year bond fell to 1.754% Monday, from 1.903% Friday.

Markets at the tail end of last week were fixated on European political risk, and a run on debt markets triggered by a downgrade for Italy,” said Mr. Park. “The lack of a downgrade offers some breathing space.”


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Oil prices dropped sharply as energy markets remain volatile at the start of a week that will test the world’s ability to house a glut of crude. West Texas Intermediate futures, considered the benchmark for U.S. crude prices, fell over 24% to $12.59 a barrel. Brent crude, the global benchmark, fell 5.3%.

The yield on the benchmark 10-year U.S. Treasury rose to 0.630%, from 0.594% Friday.

Investors will also be closely focused on the outcome from the U.S. Federal Reserve and the European Central Bank’s meetings this week. Recent economic data and forecasts from many countries have been weak, prompting policy makers to take unprecedented steps and allocate huge sums to support businesses and individuals whose finances have taken a hit.

“Normally when you have a recession, there are a number of factors that are reining in credit and stimulus and that’s not the case here,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.

Later in the week, a flood of U.S. companies—including Amazon.com, Apple and Facebook— are scheduled to report first quarter earnings. They are likely to provide insights on how leaders of the biggest American businesses view prospects for the rest of the year. But the pandemic has made earnings forecasts even less reliable than normal, analysts and investors said.

“Most investors are looking through the earnings reports as somewhat meaningless because we’ve never had this mix of fall-off in demand and central bank, government stimulus support before,” Mr. Haefele said.

Among major European equities, Deutsche Bank AG was the best performer. The stock rose over 10% after the German bank said late Sunday that it will beat analyst expectations and report a first-quarter profit. Higher revenue and lower expenses have helped it offset provisions for credit losses triggered by the coronavirus outbreak.
Across Asia, South Korea’s Kospi Composite advanced 1.8% while Hong Kong’s Hang Seng Index gained 1.9%. The stocks benchmark in Australia climbed around 1.5%.


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China’s statistics bureau Monday released data showing that industrial companies’ profits in March were down 34.9% from a year earlier, a slight improvement from the 38.3% pace of decline in January-February. The country last month began reopening some industrial hubs after closing most factories and companies to curb the coronavirus’s spread. The Shanghai Composite Index closed 0.3% higher.

Central banks’ stimulus policies and other government measures to subsidize wages are all helping to buoy markets and asset prices, said Iris Pang, chief economist for Greater China at ING Bank NV in Hong Kong. “They will take a while to reach the real economy,” she said, adding that the path to increasing consumption is unlikely to be smooth.




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When Will Disneyland And Other Parks Reopen?

Swiss banking giant UBS told clients Monday that Walt Disney Co. is likely to wait until Jan. 1 to open its theme parks and predicted the Burbank media company will see only about 50% of 2019 attendance.

“Moreover, we now believe the lingering effects of the outbreak — including crowd avoidance, new health precautions, etc. — will dramatically reduce the profitability of these businesses even after they are reopened until a vaccine is widely available,” the report said about Disney’s parks.

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Stay-at-home orders by state and local governments will dictate when parks can consider reopening. Disney said its parks will remain closed until further notice. Universal Studios Hollywood and Universal Orlando Resort announced plans to stay closed until at least May 31.

Theme park operators have been tight-lipped about what the future holds for their parks, but they have clearly been discussing plans for opening day.

Annual passholders for Universal Orlando Resort said they received a survey last week asking how likely they are to return to the park under various restrictions, such as requiring guests to wear masks or limiting park attendance to 50% of normal.

In an interview with Barron’s, Disney Executive Chairman Bob Iger said his parks would require “more scrutiny, more restrictions” so customers would feel safe to return. He suggested the idea of taking the temperature of each visitor before allowing entrance.

“Just as we now do bag checks for everybody that goes into our parks, it could be that at some point we add a component of that that takes people’s temperatures, as a for-instance,” Iger said.

On several online Disney discussion forums, theme park fans say they have uncovered a plan, presumably leaked by a Disney employee, for allowing guests to return to the Walt Disney World Resort in Florida.

The plan, titled the Secure Circuit protocol, would reopen the park with limited capacity, no parades, no castle shows, no firework displays and health checks performed at every security checkpoint. In addition, the protocol would require guests to sign a form, clearing Disney of any liability for potential exposure to the novel coronavirus.

Disneyland representatives declined to discuss whether the Secure Circuit protocol is legitimate or any plans being developed to reopen the parks.

The process of taking temperatures of entering visitors (using non-contact thermometers) has already been adopted in theme parks in Asia that closed only briefly. At Janfunsun Fancy World in Taiwan, people who have a temperature of 99.5 degrees or higher are denied entry.

At Everland Resort in South Korea, workers take visitors’ temperatures and encourage them to wear masks.

The resort’s attraction queues include markings on the ground to show how far apart each person must stand to maintain social distancing. Rides and stores are disinfected hourly. Hand sanitizer dispensers are set up around the park.



Theme park insiders have been so focused on reopening after the crisis subsides that a webinar on strategies for reopening theme parks and other attractions drew nearly 500 industry workers this month.

The April 15 webinar was hosted by Gateway Ticketing Systems, a Pennsylvania company that develops ticketing systems and consults for theme parks, zoos, museums and other attractions. “Everyone is just spinning out large contingency plans,” said Randy Josselyn, a principal at Gateway Ticketing who hosted the webinar.

Among the speakers on the webinar was Eddie Jones, a support specialist at Atlanta Botanical Garden, who said the garden has already devised a plan for reopening by allowing only 50 people to enter the gardens every 15 minutes.

The plan would cut capacity in the gardens from the normal daily attendance of about 7,000 to about 2,500, he said. A back gate would be opened so that guests could leave without creating a bottleneck at the entrance.

Industry experts say putting limits on capacity would almost certainly be a requirement so that people do not crowd together at reopened parks.

Bill Coan, chief executive of Itec Entertainment, a developer of theme park attractions and shows, said he doesn’t think capacity limits will be difficult to enforce because park fans will not be rushing back once the theme parks reopen.

“I don’t think those numbers are going to occur for some time,” he said of previous attendance numbers.

Coan echoed other theme park experts who said parks will probably open in stages, with some attractions closed in the early stages and rules imposed on how tightly packed visitors can be in lines and in stores.

But limiting capacity and hiring additional workers to take temperatures, enforcing anti-crowding rules and sanitizing rides would be expensive and could make operating theme parks unprofitable, said Martin Lewison, a business administration professor and theme park expert at Farmingdale State College in New York.



Some parks might be able to get by with fewer workers if capacity is vastly reduced, and higher ticket prices might become a profit-bolstering option, but it’s difficult to know for sure because theme park operators aren’t talking.

“These are the kind of practical ideas that I imagine operators are working through, deciding what is practical,” he said.

Whatever procedures are adopted by theme parks, Lewison said some fans will stay away but many others will be ready to return quickly.

“There is a chunk of America who says, ‘Let’s take that risk.’” he said.

For Alexandria Grable, 19, who had an annual pass for the Disneyland Resort for the last three years, the closing of the resort in mid-March convinced her that the coronavirus outbreak was a serious health threat.

But the Santa Clarita teen said she would return if Disneyland reopens.

“I think I would go,” Grable said. “I trust Disneyland enough to know they would not put their guests in harm’s way.” Other theme park devotees are less likely to rush back even if health and social distancing restrictions are added.

“Will anyone want to spin their teacup or the Roger Rabbit taxicab or Buzz Lightyear blasters, knowing how many other hands have touched them?” asked Matthew Gottula, a longtime Disneyland fan from Altadena, who said he doesn’t go anywhere without a container of hand sanitizer attached to his belt.

Another Disneyland fan, Aaron Goldberg, who has written several books on Disney parks and the Disney family, said he wouldn’t return to the parks without wearing a mask and gloves. “Maybe I’m a bit more neurotic, but it’s impossible to avoid touching just about everything at Disneyland and all of the parks,” he said.



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Global Stocks Traded Lower, As Signs Of The Coronavirus Pandemic’s Impact On Jobs And Business Activity Weighed On Markets

Futures tied to the S&P 500 ticked down 0.3%, suggesting the blue-chip index may slip after a volatile day of trading on Thursday. European stocks fell, pushing the Stoxx Europe 600 down 1.3%.

In Asia, Japan’s Nikkei 225 closed 0.9% lower, while South Korea’s Kospi Composite eased 1.3%. China’s benchmark Shanghai Composite fell 1.1% and Hong Kong’s Hang Seng Index lost 0.4%. The exception was Australia, where the S&P/ASX 200 rose 0.5%.



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The Nikkei retreated 3.2% on the week, its first pullback in three weeks, while the S&P/ASX 200 shed about 4.5%, its first such decline in five weeks, and the Kospi Composite fell 1.3%. Benchmarks in Hong Kong and Shanghai were also on track to post weekly drops for the first time in several weeks.

U.S. stocks had a turbulent session Thursday, closing flat after early gains were wiped out by reports of a setback for a key drug to treat Covid-19.

“The market has been getting its head around how much permanent damage is to be brought by the virus. And the latest figure tells us the U.S. labor market is in a bloodbath,” said Govinda Finn, an economist at Aberdeen Standard Investments.

Data published Thursday showed about 4.4 million Americans sought unemployment benefits last week, bringing the total claims for the past five weeks to more than 26 million.

Separate figures showed business activity, as measured by surveys of purchasing managers, plunged in the U.S., Europe and Japan.

Mr. Finn said his institution projected U.S. unemployment would peak at 19% by the middle of this year, as the pandemic was battering the economy much more quickly than the global financial crisis.



Layoffs directly hit consumption and social distancing was also discouraging spending. The size and persistence of the shock will cause some permanent scarring to the U.S. economy, with consumption accounting for roughly 70% of gross domestic product, he said.

Zheng Fang, chief investment officer at Keywise Capital Management, a Hong Kong-based hedge fund, said after recent rallies, neither earnings nor the progress with coronavirus treatments justified further gains in U.S. or mainland Chinese stocks.

The yield on the 10-year U.S. Treasury note slipped to 0.589% from 0.613% Thursday. Yields move in the opposite direction to bond prices.

Oil prices extended a rebound that began Wednesday. U.S. crude-oil futures for June delivery added 1.9% to $16.82 a barrel. Brent crude, the global gauge, rose 1.7% to $25.20.



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Oil Prices Soar As Traders Prepare for Wild Ride to Continue

West Texas Intermediate futures that will deliver oil in June, the U.S. benchmark, rose 20% to $16.47 a barrel. Brent crude futures, used to set prices for oil throughout global energy markets, rose 8.6% to $22.12 a barrel.

Helping prices regain some lost ground: signs of a recovery in demand for oil in China, which is emerging from coronavirus lockdowns, and tensions between the U.S. and Iran. The two nations engaged in a new round of antagonism Wednesday, when Tehran said it had launched its first military satellite into space.

“When you look at China, road traffic and refinery operations are back up,” said Norbert Rücker, head of economics at Swiss private bank Julius Baer. “Don’t forget the geopolitical side too,” he added, referring to the potential for U.S.-Iranian tensions to disrupt the movement of oil through the Strait of Hormuz, a vital channel for tankers.

The advance in prices Thursday continues a period of outsize moves in global energy markets, which have rippled through to oil producers, bond markets and currencies. The price of the most actively traded WTI futures contract has moved up or down 10%, on average, on each trading day since the start of March.

That compares with an average move in either direction of 1.5% in 2019 as a whole, according to FactSet data.


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Traders and analysts say prices will continue to swing. One gauge of how volatile WTI futures prices are expected to be over the next 30 days, the Cboe Crude Oil ETF Volatility Index, has soared more than 730% this year to its highest level on record.

Like the better-known VIX index tracking volatility in the stock market, the index uses options prices to calculate how far traders are expecting prices to move over the next month.

The oil volatility options aren’t tied to oil futures prices directly but instead to United States Oil Fund LP, an exchange-traded fund that aims to match U.S. crude prices. The fund has been at the center of the oil price drama in recent days. It accumulated a huge position in the futures market thanks to a rush of cash from individual investors.

The pandemic has stopped the world from consuming tens of millions of barrels of oil it would otherwise use every day, and storage space is filling up. Production cuts by the Organization of the Petroleum Exporting Countries and its allies, led by Russia, won’t immediately offset this decline in demand.

U.S. crude prices remain 41% lower than they were at the end of last week. In an aberration of historic proportions, the lightly traded May WTI futures contracts fell below $0 for the first time on Monday, meaning traders had to pay buyers to take oil off their hands.

“We’re close to capitulation,” said Marwan Younes, chief investment officer at Massar Capital Management. “We’re getting close to the point when people just stop trying to buy this,” he added, referring to U.S. crude oil futures.

Crude-oil stockpiles in the U.S. climbed by 15 million barrels to 518.6 million barrels last week, the Energy Information Administration said Wednesday, putting them about 9% above the five-year average. Production fell by a modest 100,000 barrels a day.



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Global Stocks Steady As Oil Prices Recover

Global stocks were little changed as oil prices regained more ground after days of turmoil.


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Futures for the S&P 500 were flat, suggesting moves in U.S. stocks later Thursday could be muted. The pan-continental Stoxx Europe 600 fell flat. Major benchmarks in the Asia-Pacific region were mixed: Japan’s Nikkei 225 closed 1.5% higher, while indexes in Australia and Shanghai showed little change. Hong Kong’s benchmark gained 0.5%.

The yield on the 10-year Treasury note rose slightly to 0.622% from 0.618% in the previous session. Yields fall as bond prices rise.

Oil prices built on Wednesday’s rebound, which was sparked by the prospect of fresh U.S.-Iran tension. Strains in the Middle East can boost crude prices by signaling potential disruptions to shipments of oil around the world and possible supply shortages.

U.S. crude-oil futures for June delivery advanced 6.9% to $14.71 a barrel. Brent crude, the global equivalent, rose 5.3% to $21.45 a barrel.

Eli Lee, head of investment strategy at Bank of Singapore, said markets had been buoyed by hopes that economies could quickly get back to normal as the coronavirus pandemic came under control, and by hefty support from the Federal Reserve, even extending to riskier assets like lower-rated bonds.



However, Mr. Lee said: “The path towards normality is going to be very gradual.”

History tells us that the market correction during prolonged recessions of more than one year tends to be far deeper” than seen so far, he added.

Fresh coronavirus outbreaks in Asia have added to uncertainty about how quickly governments can safely resume normal economic activity. In the U.S., President Trump said Wednesday that he strongly disagreed with the governor of Georgia’s decision to allow some nonessential businesses to reopen as soon as Friday, saying this was too soon.

Frank Benzimra, head of Asia equity strategy at Société Générale, said China offered a template for economies reopening. “Even if things are getting back slowly to normal, the borders aren’t open, so free circulation of goods and trade isn’t coming back quickly.”

The Dow Jones Industrial Average clawed back some of this week’s losses Wednesday, gaining 2% as oil prices rose and investors looked to corporate-earnings reports to gauge the health of U.S. businesses during the coronavirus pandemic.



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Euro Zone Business Activity Crashes To ‘Shocking’ Lows On Coronavirus Pandemic

Euro zone business activity hit another record low during April in another sign that the coronavirus pandemic is causing severe economic damage across the region.

The IHS Markit Purchasing Managers’ Index, which measures both the services industry and manufacturing, dropped to 13.5 in April, according to preliminary data. In March, the same index had already recorded its biggest ever single monthly drop to 29.7. A contraction in PMI figures — a figure below 50 — indicates a likely fall in economic growth overall.

Earlier in the session, Germany’s flash index came in at 17.1, a record low, versus a figure of 35.0 the month before. This was worse than analysts had been expecting with Phil Smith, principal economist at IHS Markit, saying it “paints a shocking picture of the pandemic’s impact on businesses.”




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Oil Collapse Continues As Brent Plunges More Than 15%

Oil prices continued to plummet Wednesday as concerns over limp demand and limited remaining storage capacity lingered.

In the afternoon of Asian trading hours, international benchmark Brent crude futures dropped 15.57% to $16.32 per barrel. Meanwhile, the June contract for West Texas Intermediate shed all of its earlier gains as it dropped 6.66% to $10.80 per barrel. The July contract for WTI also declined and was last trading below $19 per barrel.

Per Magnus Nysveen, senior partner and head of analysis at Rystad Energy, warned that the situation in the oil markets is “going to be worse.”

“The world is running out of place to store the oil,” Nysveen told CNBC’s “Street Signs Asia” on Wednesday, adding that storage acts as “a kind of buffer.”

“When the supply and demand balance is positive or negative, then you can build or draw from storage,” he said. “But when the storage gets full, then there is no buffer for this very strong imbalance that we’re seeing.”



Pictet Wealth Management’s Jean-Pierre Durante agreed with Nysveen’s assessment of the situation, commenting in a Wednesday note that the “world is overflowing in oil” despite a recent decision by the Organization of the Petroleum Exporting Countries and its allies — known collectively as OPEC+ — to cut oil supply.

“World storage capacity will rapidly reach saturation point,” said Durante, who is head of applied research at Pictet Wealth Management.

Global demand for oil has fallen dramatically, with major economies worldwide effectively frozen as a result of coronavirus-induced lockdowns imposed by authorities scrambling to contain the spread of the disease.

Wednesday’s moves in oil followed recent sharp declines in the sector. The May contract for WTI, which expired Tuesday, plunged below zero for the first in history before clawing its way back into positive territory. The June WTI contract plunged more than 40% on Tuesday while international benchmark Brent dropped from levels above $24 per barrel.



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US Oil Fund Plunges 38%, Halted For Trading Repeatedly

Trading in the United States Oil Fund, a popular exchange-traded security known for its ‘USO’ ticker which is supposed to track the price of oil and is popular with retail investors, plunged nearly 40%.

At one point, trading was halted in morning trading after USCF, the manager of the fund, said that it was temporarily suspending the issuance of so-called creation baskets. It was then halted periodically during the trading day for volatility.


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Creation baskets are how an ETF creates new shares to meet demand. The baskets hold the underlying securities which in this case are plummeting oil futures. With the halting of these creation baskets, the ETF will essentially now trade with a fixed number of shares like a closed-end mutual fund.

On Friday, USCF changed the structure of the USO fund so that it can hold longer-dated contracts. Per a regulatory filing, around 80% of the fund will be in the front-month contract, with 20% in the second-month contract.

John Davi, founder and CIO of Astoria Portfolio Advisors, said the new structure was implemented as a way to try and protect investors from plunging crude prices. The coronavirus pandemic continues to sap worldwide demand for crude, which has sent prices to their lowest levels on record.

According to Davi, the USO is primarily owned by retail investors, which can be dangerous for those who believe they are betting on oil prices moving higher over time, without fully understanding the dynamics in the commodity market.

“To buy USO you have to understand the oil futures market,” Davi told CNBC. “They [retail investors] just buy the ETF because they think the price of crude will go up, but they don’t understand the drivers, which are fairly complicated.”

USCF did not provide a comment.

On Monday, the May contract for oil fell to a negative price, an unprecedented event wreaking havoc on the oil markets. The contract expires today. USO likely had already sold that contract because it has stated in the past that it would invest in the next contract two weeks before expiration. So it owns futures for the June month and now likely the July month, given the revised structure.

June futures began cratering as well on Tuesday, pressuring the fund. June futures expiring in a month dropped 50% to under $10 on Tuesday. July contracts fell 27%. The May contract, however, recovered a bit and was trading with a positive value again of $9.

USO could run into trouble if those contracts also fall to a negative value as they near expiration, mimicking the May contract’s plunge ahead of its expiration.

Negative futures value is unprecedented and it is unclear how products like exchange-traded funds built for the retail investor to participate in the market will handle such events.

Hayman Capital Management CIO Kyle Bass has been warning investors about the danger of exchange traded funds that track oil prices.

“Retail has been plowing into these oil contracts thinking they’re buying spot crude oil when they’re buying the next front month. So they’re paying $22 a barrel when the spot market’s negative $38. Retail investors are going to get fleeced if they continue to fly into these oil ETFs,” he said Monday on CNBC’s “Closing Bell.”

Following Monday’s price action, Bass, who said he holds short positions against some energy-focused ETFs, tweeted that he would demand 100% collateral.

Warren Pies, energy strategist at Ned Davis Research, sounded a similarly cautious tone.

“At best, they are expensive ways to gain programmatic futures exposure,” he said of commodity-based ETFs on Monday. “At worst, they are designed to implode. Still, money continues to flow into the USO ETF. As of last week, USO’s assets reached an all-time high of more than $5 billion. To reiterate: In this environment, USO is a train wreck. Stay away,” he said.



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Oil-Price Crash Deepens, Weighs On Global Markets

The crash in global oil prices deepened Tuesday, as pain spread to currencies of major exporters and shares in energy producers.

Brent crude futures, the international benchmark for oil markets, dropped 15% to $20.67 a barrel, their lowest level since 2002. The decline came a day after the price of West Texas Intermediate, the U.S. crude benchmark, dropped below zero for the first time in history.

U.S. oil markets came under further pressure. The June WTI futures contract, now the most actively traded, dropped 17% to $17.03 a barrel. The May contract, which settled at a historic minus $37.63 a barrel Monday, rose to minus $6.30 a barrel in thin volumes on its final day of trading.

The convulsions in oil markets underlined the huge hit that government-imposed lockdowns designed to stall the spread of the coronavirus have dealt to oil demand. With producers unable to shut wells fast enough, and OPEC and G-20 production cuts not due to take effect until early May, traders say that the world is essentially running out of space to store oil.

“Whatever oil analysts and oil traders have learned over the course of the last 50 years or 100 years was all of a sudden put in question” by Monday’s negative oil prices, said Eugen Weinberg, head of commodities research at Commerzbank. “Everyone has been shocked.”

Oil futures, used by investors to bet on the direction of prices and by producers to protect against market swings, had performed better than the physical oil market for several weeks. Now, they are being stung by the slide in demand for actual barrels of crude.

“This is the market signaling to producers that you need to cut off more production faster because we’re drowning in oil at this point,” said Saad Rahim, chief economist at Swiss commodities trader Trafigura.

The drop in oil prices rippled through to the currencies of oil-producing nations. Russia’s ruble dropped 1.7% to trade at 76.81 a dollar, extending its depreciation against the greenback this year to 19%.

The economy of Russia, the world’s second-largest oil producer in 2019, stands to suffer from lower oil prices. A weak currency could prevent the Bank of Russia from cutting interest rates as much as it would like to bolster growth at a monetary-policy meeting on Friday, said Piotr Matys, a strategist at Rabobank.

U.S. stock futures and European equity markets were down Tuesday, led lower by shares in energy companies. Shares in Noble Energy Inc. fell more than 5% in New York in premarket trading, as did shares in oil-field services provider Schlumberger Ltd. Among Europe’s oil majors, BP PLC lost 4.6%, Royal Dutch Shell PLC 4.5% and Total SA 3.5%.



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The underlying problem for energy markets remains the collapse in demand caused by the coronavirus, which has grounded planes, stopped billions of people from driving and disrupted global trade. Economists have forecast a deep global recession and international oil organizations estimate that demand will shrink in the coming weeks.

“We’re running out of storage,” said Bob McNally, president of consulting firm Rapidan Energy. “Demand is contracting two or three times as fast as supply.” The drop in prices is a “brutal but efficient” mechanism to “persuade producers to keep oil under the crust,” Mr. McNally said.

The drop below zero makes it more likely that President Trump will impose tariffs on oil imports into the U.S., added Mr. McNally, a former White House adviser.

Market mechanisms that might help rectify the slump appear to be breaking down because of the lack of storage space and demand for oil globally.

Typically, low U.S. prices would encourage traders to buy cheap American oil and sell it at a higher price in Europe or Asia. The way Brent crude prices sank in tandem with WTI on Tuesday suggests “the world doesn’t want to take U.S. barrels,” said Vincent Elbhar, co-founder of Swiss hedge fund GZC Investment Management.

Monday’s moves also prompted urgent discussions between Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries about whether to cut production as soon as possible. OPEC members are considering bringing forward the start date for production cuts from May 1.



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A Blast Of Earnings News Is Coming… But The Market May Be More Focused On When The Economy Will Reopen

Earnings from IBM, Netflix, Coca-Cola and dozens of others are expected in the week ahead, but as the state shutdowns now reach the one-month threshold, the market is more likely to trade on virus headlines and news about reopening the economy.

There are also some important economic reports, including existing home sales on Monday and durable goods on Friday. But it is the weekly jobless claims data that will again be most relevant, as economists watch to see whether the number of workers seeking claims has now peaked and whether there are any signs some are returning to jobs, as government funds reach the hands of business owners.

In the past week, stocks were higher, but there was a divergence with the Dow up just under 2.2% at 24,242, and Nasdaq, surging 6%, lifted by tech and biotech. The S&P 500 gained 3% for the week and is now 31% off its March lows.

Stocks gained amid signs the virus outbreak has peaked and some reopenings could start slowly in the next few weeks.

The market also bounced Friday as the results of an early study of a Gilead drug showed promise with severe cases of coronavirus. Technology stocks were up about 4% for the week, and health care was up more than 5% while consumer discretionary stocks led with a gain of more than 6%.



“As the virus news goes, so go risk assets. People expect bad economic data,” said Patrick Leary, chief market strategist at Incapital. “The data is all expected to be horrible. The only economic data we can really look at now and start to measure is the claims data on Thursday.” As of April 11, more than 22 million workers claimed unemployment benefits over a four-week period, as states shut down and schools, restaurants, stores and many other businesses closed or were forced to cut back.

Charts are important
Analysts who watch stock charts say technical levels will continue to have a powerful pull on the market, since so many traders have set their computers to trade around those numbers.

For instance, the S&P 500 had a hard time breaking through the 50-day moving average Friday, and fell back after it initially edged near 2,862 in morning trading. But at the end of the trading day, it smashed through that level, surging to close at 2,874, a positive sign for Monday’s open. The 50-day literally is the average closing price for the S&P over the previous 50 sessions. Technical analysts believe watching moving averages gives them an important tool for price trends and momentum.

Bob Doll, Nuveen’s chief equity strategist, said he believes the market hit its bear market low on March 23, but it could take another dive towards lows at some point.

“My [low] target was 2,350. We spent 36 hours below that and got to 2,192. If there’s a secondary low, then probably the lowest chance is 2,350,” he said. “I’m not sure we’re going to go there, based on two things, the power of the rally and two, the stimulus. It’s been awesome.”

Doll said after the first blow-off phase to the March low, the second phase of a bear market is the type of choppy trading that results in swings both higher and lower.

“Then you get phase two, which is a whipsaw fashion and it bounces all over the place. … You kind of get dizzy, then you make the secondary low.” Doll said. Then ultimately, the market moves on to where price-to-earnings ratios and earnings in general will matter again.

“What’s driving the market is not earnings. What’s driving it is technicals,” said Doll.

What about earnings
First quarter earnings began to roll in during the past week, starting with major banks. So far, based on actual reports and forecasts, first quarter earnings are expected to be down 14.5% in the first quarter, the worst quarter since the more than 15% decline in the third quarter of 2009. As for the second quarter, a much sharper 27.3% decline is expected, according to I/B/E/S data from Refinitiv.

IBM reports Monday, while Coca-Cola, Netflix, Travelers, and Texas Instruments release results Tuesday. AT&T, Delta Airlines, and Intel, Blackstone and Eli Lily are reporting Thursday. American Express and Verizon are expected Friday.

Doll said he expects the market to listen to comments from corporate executives on conference calls but ignore the actual earnings. “The market is going to pay a lot more attention to what can a rebound look like, and what can 2021 numbers look like,” he said. “They’ll be selling on that versus how deep is the hole going to be in the second quarter. The macro questions around that are recurrence, therapeutics, and vaccine and how fast can the economy come back, and nobody knows the answer to that.”

President Donald Trump laid out guidelines for reopening the economy, but left the decision making up to the states, which are facing varied levels of new infections. One issue is the lack of testing, and American businesses have pressed for more availability of test kits so workers can be brought back more safely.

Doll said he is partial to health care and technology stocks, and one reason is because of the Fed’s quantitative easing programs. “We’re now in QE4. We had QE1, QE2, QE3, and six months after QE 1, 2 and 3, there were two sectors that outperformed-technology and health care, and there were two that underperformed, utilities and REITs,” he said.

Doll said he also is looking at how stocks might come through the virus shutdowns. “Part of what you want to make sure is the company is going to make it through, and make sure the industry has decent demand getting out of it. If it has decent demand during it, that’s a good thing, and that takes you back to health care and technology,” said Doll.

Leary said he expects companies to be scrutinized somewhat differently by analysts this quarter, and balance sheets will be more important.

“Its going to be on a case-by-case basis about how analysts are going to look at them. This is not a typical recession. Recessions seem to hit different sectors,” he said, “This one one is different in that it really has several losers like airlines and travel and entertainment companies. It has some real winners too. I like health care and pharma. Anything that’s defensive in nature is going to perform well.”

Companies have been tapping the corporate bond market at a record pace to boost their cash piles to help them through the economy’s shutdown, and the coming week should be no different.

The corporate debt market has been open for business and spreads have narrowed since the Fed announced a program to buy corporate debt. Companies have issued more than $160 billion in investment grade bonds so far this month, with JP Morgan issuing $10 billion this past week in the biggest bank deal ever, according to Credit Flow Research.

More are expected in the coming week, as companies report earnings and exit the blackout period.

“I think what corporate treasurers know is the window of opportunity for issuing debt at reasonable rates will quickly close once the economy starts opening,” said Leary. He said balance sheets and earnings will be more scrutinized once things start to become more normal.

“They won’t have an excuse anymore … right now, everything is expected to unexpected,” he said, “I think that window will close, and we’ll have to take a look at the bond market again. Their ability to issue will be impacted by their balance sheets…[now] there’s plenty of cash coming at them. The Fed will step in to support.”



Leary said some of the interest in corporate bonds is from investors who are fearful of buying stocks right now but may want to invest in a company through the safer play of its bonds. Leary said energy bonds are among the least desirable, with the huge drop in crude prices.

West Texas Intermediate crude futures for May settled at $18.72 per barrel, it lowest level since January, 2002. But that contract expires Tuesday. The June contract settled at $25.08 per barrel, and will resume trading there next week as the active contract.

“It’s just a reflection of physical market conditions,” said John Kilduff of Again Capital, of the big decline in the May contract. He said it shows that futures traders do not want to actually take delivery of the commodity, due to an increasing lack of storage space.


Week ahead calendar


Monday

Earnings: IBM, Steel Dynanics, Equifax, Zions Bancorp, Ally Financial, Halliburton, Infosys, Royal Phillips, Truist Financial

Tuesday

Earnings: Coca-Cola, Netflix, Travelers, Texas Instruments, Chubb, Lockheed Martin, CIT Group, SAP, HCA Healthcare, Manpower, Prologis, Comerica, Emerson Electric, Synchrony Financial, Snap, Canadian Pacific Railways, Interactive Brokers, Teradyne

8:30 a.m. Philadelphia Fed nonmanufacturing

10:00 a.m. Existing home sales

Wednesday

Earnings: AT&T, Las Vegas Sands, Alcoa, Boston Beer, Kinder Morgan, Delta Air Lines, Baker Hughes, Quest Diagnostics, Kimberly-Clark, Nasdaq, Discover Financial, Netgear, Seagate Technology, SLM, TD Ameritrade, CSX, Biogen, Thermo Fisher, LM Ericsson

9:00 a.m. FHFA home prices

Thursday

Earnings: Intel, Blackstone Group, Eli Lily, Credit Suisse, Invesco, Huntington Bancshares, Tractor Supply, Capital One, FirstEnergy, Hershey, Southwest Air, Union Pacific, Citrix, Domino’s Pizza, PulteGroup

8:30 a.m. Weekly claims

9:45 a.m. Manufacturing PMI

9:45 a.m. Services PMI

10:00 a.m. New home sales

Friday

Earnings: American Express, Verizon, Sanofi, Eni

8:30 a.m. Durable goods

10:00 a.m. Consumer sentiment



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Financial Markets – Top 5 Things To Watch This Week



While dozens of earnings reports are expected in the coming week and economic data will bring more insights into the impact of the coronavirus the main focus will still be on developments relating to the virus and how soon the economy can reopen.

Around 20% of S&P 500 companies are expected to report results in the coming week and there are also some important economic reports, including U.S. jobless claims, durable goods and existing home sales. The euro zone is to release PMI data for April along with reports from Germany’s ZEW and Ifo, while the U.K. is set to publish figures on unemployment, inflation and retail sales. Here’s what you need to know to start your week.


Some states to begin lifting coronavirus restrictions
U.S. President Donald Trump said on Saturday that Texas and Vermont will allow certain businesses to reopen on Monday while still observing coronavirus-related precautions.

Demonstrations to demand an end to stay-at-home measures spread to Texas on Saturday. Trump appeared to encourage protesters with a series of Twitter posts on Friday calling for them to “LIBERATE” Michigan, Minnesota and Virginia, all run by Democratic governors.

Trump has touted a thriving economy as the best case for his re-election in November.

Several states, including Ohio, Michigan, Texas and Florida, have said they aim to reopen parts of their economies, perhaps by May 1 or even sooner, but appeared to be staying cautious.

Vice President Mike Pence said on Friday the U.S. had the capacity to do a sufficient amount of testing for states to move into a phase one of reopening, but Governors and state health officials say there is nowhere near enough test kits and equipment available.

The U.S. has by far the world’s largest number of confirmed coronavirus cases, with more than 720,000 infections and over 37,000 deaths.

Earnings deluge
Around one hundred S&P 500 companies are expected to report results this week, as investors digest a market surge that has lifted the S&P index 25% from its March lows as of Thursday. Those include major industrial, tech and consumer products companies, as well as streaming company Netflix (NASDAQ:NFLX), whose shares rose to a record high in the past week as widespread stay-at-home orders drove demand for online streaming services.

Some of the companies also reporting are among those worst hit by the pandemic’s fallout, including airlines such as Delta Air Lines (NYSE:DAL) and Southwest Airlines (NYSE:LUV).

Investors are bracing for brutal first-quarter earnings but will also be on the lookout for indications of how soon business can get back on track.

U.S. initial jobless claims may ease
Initial jobless claims could slow again this week as the initial reaction to shutdowns starts to ease. More than 22 million Americans have filed for unemployment benefits in the past month as closures of businesses and schools and severe travel restrictions have hammered the economy.

Durable goods orders are expected to plunge, given recent weakness in manufacturing data and the collapse in the oil and gas sector caused by tumbling commodity prices.

The calendar also features updates on new and existing home sales and PMI data, which is expected to drop further.

Meanwhile, the Federal Reserve is in blackout mode ahead of its next scheduled policy meeting on April 29th.

Euro zone PMI pain
Thursday’s advance readings of euro zone PMIs for April are likely to make for painful reading.

Composite euro zone PMIs, comprising services and manufacturing, dropped to a record low of 29.7 last month, the biggest monthly drop since the survey began in July 1998.

In addition to the PMI data reports from Germany’s ZEW and Ifo Institutes will shed more light on the health of the bloc’s largest economy as it prepares to ease virus lockdown measures.

Euro zone finance ministers are to meet on Thursday to continue discussions about an EU fund to boost the recovery. The issue of joint European debt, or corona bonds, is likely to come up again, but the chance they will ever see the light of day remains slim.

UK data to give first real look at economic hit
The scale of the economic fallout from coronavirus pandemic in the UK is likely to be both larger, and much more rapid, than that of the Global Financial Crisis.

With that in mind, some economists expect Thursday’s retail sales figures to show a decline of around 10%, but this number could be much larger based on other spending indicators already released. PMI data is also expected to point to a steep slowdown in activity.

The week will also bring what will be closely watched updates on unemployment and inflation.




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The Stock Market Is Ignoring The Economy

The Dow Jones Industrial Average staged its best two-week performance since the 1930s, the explosive rally is a sign that many are positioning for the U.S. to make a speedy recovery when the coronavirus crisis eases. Investors have been encouraged in recent days by signs that several states will move to resume business, along with hopes that a viable treatment for Covid-19 could be near.


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The blue-chip index rose 2.2% this week, extending its rally over the past two weeks to 15%—its best performance since 1938. The S&P 500 climbed 3% this week, while the Nasdaq Composite surged 6.1% as investors piled into highflying technology stocks. The Dow and S&P 500 are still down more than 10% for the year, while the Nasdaq’s losses have been cut to 3.6%

Many investors agree the most important driver of the rebound has been the Federal Reserve’s massive stimulus plan, combined with the efforts of the U.S. government, which sent a signal that both were willing to step in like never before to buoy the economy. U.S. stocks bottomed March 23, after the Fed cut rates to near-zero.

“They took away the depression. That scenario is out of the picture now,” said Zhiwei Ren, a portfolio manager at Penn Mutual Asset Management. “The Fed is the fundamental reason” for the rebound.

The central bank also unleashed a massive program to buy Treasurys and mortgage-backed securities, while President Trump signed a roughly $2 trillion stimulus package, the biggest relief package in U.S. history.

For some investors, it doesn’t pay to bet against stocks after the Fed stepped in. The stimulus spurred a fear of missing out among investors and gave many the confidence to resurrect some of the most popular tactics of recent years—buying dips in the stock market and piling into shares of big technology companies.

The coronavirus’ toll on the population and the economy has been dour. More than 150,000 people around the globe have died, while cases world-wide have topped 2 million. In the U.S., more than 22 million Americans have sought unemployment benefits in recent weeks.

Retail sales, a measure of purchases at stores, gasoline stations, restaurants, bars and online, fell by a seasonally adjusted 8.7% in March from a month earlier, the most severe decline since record-keeping began in 1992. Earnings for the first quarter among big U.S. companies are expected to decline nearly 15% from a year earlier, according to FactSet, which would mark the biggest decline since 2009.

The Fed’s latest move “reinforces our view of a full asset price recovery, and equity markets reaching all-time highs next year,” Mr. Kolanovic said in a recent note. “Investors with [a] focus on negative upcoming earnings and economic developments are effectively ‘fighting the Fed,’ which was historically a losing proposition.”

There may be limits to that approach, other analysts said. For example, a $350 billion small-business loan program from the U.S. government has already exhausted its funding, highlighting the mammoth challenge that lawmakers face—and sheer amount of cash necessary—to support the economy and keep Americans employed.

These types of loans can be forgiven if firms don’t lay off workers, but U.S. lawmakers have recently struggled to agree on the next round of coronavirus emergency aid.

Despite the stimulus checks going to Americans around the country, measures by the central bank and government can’t alter human behavior and force people to leave their homes, eat at restaurants, shop at malls and go to movies. That has led some analysts to say a recovery may take longer than many are currently anticipating.


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“How long before you and I are going to feel comfortable going to a concert again?” said Dominic Nolan, a senior managing director at Pacific Asset Management, which oversees roughly $12 billion in debt. “A government program doesn’t really help that.”

Mr. Nolan said that he has recently bought bonds of investment-grade companies after the Federal Reserve’s recent moves.

Some investors are still anxious because the bond market is sending a more cautious signal. Investors have continued scooping up traditionally safe assets like government bonds and gold as stocks have rallied.

The yield on the 10-year Treasury note has fallen to 0.655% from 1.26% in mid-March as bond prices have risen, while gold prices hit their highest level in more than seven years this week. The concurrent gains across traditionally risky and safe assets alike suggest that many remain concerned about an extended downturn.

Investors have also treated some corners of the stock market as a hiding place, piling into the technology darlings that powered markets higher in recent years.

“The Nasdaq is trading like a safe haven in a way,” Mr. Ren of Penn Mutual Asset Management said.

Amazon.com Inc. and Netflix Inc. both surged at least 14% this week and set records, while some of the momentum-driven trades that were popular earlier in the year also re-emerged. Tesla Inc. has risen for 10 consecutive trading days, its longest winning streak on record, bringing its gain for the year to 80%.

It seems like a “hold your nose, close your eyes and buy,” situation, said Mike Bailey, director of Research at FBB Capital Partners. “Even though there’s a torrent of economic data coming.”

Mr. Bailey said he has been surprised by the “stocks going up on bad news” phenomenon. However, he has bought shares of Amazon and Apple Inc.

The recent rally among big tech stocks underscores their hefty influence on the market. The S&P 500, which is weighted by market-capitalization, is down 11% this year, while a version of the index that gives every company an equal weighting has plummeted 19%.

“You have the trillion dollar guys that are doing fine,” Mr. Nolan said. “I think on average companies have gotten hit really hard.”



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Stock Market Investors Are Too Optimistic …

There has been a V-shaped recovery; in the stock market, not in the economy. That is dividing opinion between the doomsayers who think this divergence makes no sense, and those who believe that the Federal Reserve and its central bank peers have this covered — and that they’ll restore the economy to its former state.

That doyen of bargain hunters, Warren Buffett, has been conspicuous by his absence from the recent spate of share buying. Notably, he’s been a net seller of airline stocks.



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The S&P 500 lost one-third of its value between its record high on Feb. 19 and March 23. It has clawed back half of that as the Fed chucked out its rule book and went on a shopping spree for assets.

Equities are pretty much the only type of security that it won’t be adding to its ballooning balance sheet, although a fresh bout of market mayhem might change that too. America’s central bank is already snapping up exchange-traded funds and junk bonds, after all.

A 27% recovery in equities is surprising given that we still have no idea of the virus’s lasting impact on economic output, with only a very partial return to business activity planned and no vaccine in sight.

The surge in jobless claims and companies furloughing staff makes forecasting more art than science, much like Covid-19 statistics. As Torsten Slok, Deutsche Bank AG’s chief economist, points out, a decade of U.S. employment gains have been reversed in a month. The International Monetary Fund’s global economic predictions this week were the bleakest since the 1930s.

The monetary and fiscal response has been spectacular but can it prevent a permanent loss of growth if people’s consumption, travel and working practices have been altered fundamentally? A wave of defaults, credit downgrades into junk territory, bankruptcies and price drops in real assets such as aircraft and property would change the more positive stock market narrative quickly, as would a second wave of the virus.

Parts of the world, Europe in particular, were at risk of recession before the outbreak. Crude oil prices below $20 per barrel don’t suggest global demand will come roaring back.

The equity market is meant to reflect anticipated corporate earnings, and although it’s often given to wild optimism, this is an entirely new situation. How can anyone say with a straight face that they can estimate future earnings right now? There’s little point scouring through first-quarter results apart from looking at how much provisioning the banks are putting in place for loan losses and how much credit has been drawn down.

Any crisis throws up winners — Amazon.com Inc (NASDAQ:AMZN). shares have hit new highs — but most companies are losing. More than half of workers are employed by small- and medium-sized enterprises, which will struggle to get all the financial assistance on offer.

The latest Fed stimulus package adds another $2.3 trillion of support and from this week corporates can go directly to the central bank for commercial paper funding. The ability of the Fed to really sustain stock prices is going to be tested like never before. More stimulus is always being promised but after a decade of quantitative easing, there will be a limit to its effectiveness.

Catastrophe has been avoided but most of the emergency measures are geared toward liquidity and borrowing costs. Growth is the thing that matters most for equity valuations in the medium term, and no one can guarantee that.

Consumers will only return to familiar spending habits if they have regular income and governments don’t raise taxes to pay for the current splurge. More dividends will be cut or cancelled. The hit to earnings will only be partially recoverable as most consumption is immediate and large items such as cars and electrical goods can be put off for other years.

Equity markets are betting big on the lasting results of all the stimulus. A swifter end to lockdowns or a promising vaccine development would be something to get excited about. Until we have that, the confidence looks overdone.



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Global Stocks And U.S. Futures Gain Despite China GDP Plunge

Stock benchmarks in the Asia-Pacific region rose, while S&P 500 stock futures traded higher, pointing to a strong session for U.S. shares on Friday.



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Market watchers said a range of factors helped power the rally, including the prospect of the U.S. gradually getting back to work and some encouraging news on potential treatments for the new coronavirus. Investors were able to look past data showing an unprecedented—but widely expected —plunge in Chinese economic activity.

In early-afternoon trading in Hong Kong, E-mini S&P 500 futures gained more than 3%. Australia’s S&P/ASX 200, Japan’s Nikkei 225 and South Korea’s Kospi rose by about 2% to 3% each, and the Shanghai Composite Index added 0.9%, while Hong Kong’s Hang Seng Index advanced 2.3%.

Andy Maynard, managing director of equities sales and trading at China Renaissance Securities, said news about possible coronavirus treatments had buoyed markets. He said that while effective drugs might take years to develop, the developments were catalysts to say the situation isn’t as bad as feared and that markets would recover.

Shares of Gilead Sciences rose 15.1% in late U.S. trading after a report that one of its experimental drugs might be performing well in clinical trials of patients with Covid-19, the respiratory disease caused by the new coronavirus.

Ben Luk, senior multiasset strategist at State Street Global Markets, said other factors were also boosting sentiment in regional markets. Those included the prospect of the U.S. gradually reopening its economy and better-than-expected export figures from Singapore.

Singapore said Friday that exports, excluding oil, rose 17.6% in March from a year earlier, far better than the median 7.9% contraction forecast in a Wall Street Journal poll of 11 economists. “There’s more comfort that China continues to recover based on those export numbers,” Mr. Luk said.



Markets remained strong even as official statistics showed China’s economy shrunk 6.8% from a year earlier in the first quarter. That was the first year-over-year contraction since Beijing began reporting the quarterly figure in 1992, but it was less sharp than the 8.3% median forecast of economists polled by The Wall Street Journal.

“Everybody was expecting a very bad first quarter,” said Chi Lo, senior economist for Greater China at BNP Paribas Asset Management. Mr. Lo said the Chinese government’s goal of doubling the economy in size from 2010 to 2020, in real terms, or after adjusting for inflation, is now out of reach.

He added that the speed with which China’s economy returned to full strength would depend partly on how badly the pandemic hit overseas demand for its goods and services.

In the U.S., President Trump released new federal guidelines on reopening the economy that would leave decision-making largely up to governors. Mr. Trump said: “We must have a working economy, and we want to get it back very, very quickly.”

The Dow Jones Industrial Average and the S&P 500 on Thursday posted modest gains even after data showed another sharp rise in Americans seeking jobless benefits, and slumping construction of new homes.

Globally, confirmed cases of the new coronavirus reached nearly 2.2 million, with the U.S. accounting for nearly one-third of the cases, according to data from Johns Hopkins University. The number of deaths world-wide has topped 143,000.



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Global Stocks Waver Amid Growing Signs Of Coronavirus’s Economic Toll

U.S. futures and European stocks gained, even as some Asian indexes fell, as investors assessed how the coronavirus pandemic would affect economies.

Futures for the S&P 500 rose 1%, as did Europe’s pan-continental Stoxx Europe 600.

The Shanghai Composite in mainland China and South Korea’s Kospi reversed earlier losses to trade slightly higher. Hong Kong’s Hang Seng Index fell around 0.7%.

Japan’s Nikkei 225 and Australia’s S&P/ASX 200 index both closed more than 1% lower.

Major banks declined, after a big drop overnight in U.S. Treasury yields, with HSBC Holdings PLC, Mitsubishi UFJ Financial Group MUFG -3.82% and Commonwealth Bank of Australia falling between 1.7% and 2.1%.

The Dow Jones Industrial Average slid 1.9% Wednesday, as retail-sales and manufacturing data refocused investors’ attention on the costly toll of sweeping lockdown measures to contain the coronavirus. The Federal Reserve said Wednesday that economic activity “contracted sharply and abruptly,” resulting in lost jobs and lower wages.

“The initial shock phase is behind us,” said Stefan Hofer, chief investment strategist at LGT Bank Asia, but as hard data emerges on the economic impact of lockdowns, “the market will still react to that negatively.”

Nearly 17 million Americans have already made new filings for unemployment benefits since mid-March. U.S. jobless claims for the week ending April 11 are due Thursday.

Daryl Liew, chief investment officer at REYL Singapore, said the pullback in shares, following a sharp rebound in recent weeks, reflected concerns a drawn-out pandemic could extend the economic downturn.


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“Containment strategies will probably be in place for far longer than expected, and if this thing is prolonged, you’re going to get insolvency risks. Companies might really struggle to stay afloat,” he said.

Confirmed cases of the coronavirus have passed 2.06 million globally, according to data from Johns Hopkins University, with the U.S. accounting for about a third of those. The global death toll exceeded 137,000.

Oil prices remained weak on concerns about slumping demand. West Texas Intermediate, the main U.S. crude gauge, inched up to $19.95 a barrel. It closed on Wednesday at $19.87, below the $20 mark for the first time since 2002.

Mr. Hofer of LGT Bank said the collapse in demand for crude oil outweighed historic output cuts from the Organization of the Petroleum Exporting Countries and others including Russia.

“The outlook for oil is basically lower for longer,” he said. For U.S. crude, he said, “$20 is the floor perhaps, but going above $30 over the next 12 months seems unlikely.”

Brent crude, the global oil benchmark, bounced 1%, after falling more steeply than its U.S. equivalent in the previous session.

The yield on the 10-year U.S. Treasury note, a security that is seen as a haven, was little changed at 0.641%, according to Tradeweb, after government bonds rallied in the previous session.

The dollar extended gains Thursday. The WSJ Dollar Index, which tracks the U.S. currency against a basket of 16 others, rose about 0.3% to 94.



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Stock Markets Around The World Rose On Optimism That Economic Activity May Improve In The Near Future

Futures tied to the Dow Jones Industrial Average rose 1.5%, suggesting U.S. stocks could gain ground later in the day. The pan-continental Stoxx Europe 600 advanced 1.2%. Asia-Pacific stock indexes also rose Tuesday. The benchmark Shanghai Composite Index closed up 1.6%.

Global coronavirus infections topped 1.9 million, with more than 119,000 deaths, according to Johns Hopkins University data. The number of new cases each day appeared to level off in the U.S., and President Trump told reporters his administration is nearing completion of a plan to reopen the country “hopefully ahead of schedule.” But in Europe, France, Italy and Spain extended lockdowns to curb the spread of the virus.



Investors are watching for news about the length of the lockdowns to try to call when the market has reached a trough and could be set to rise again, said Georgina Taylor, a multiasset fund manager at Invesco.

“Anything that suggests that it’s not a complete catastrophe, people will take that as the bottom,” she said.

Stocks in mainland China were buoyed by better-than-feared trade data, which showed exports in March down 6.6% from a year earlier, and imports down just 0.9%. Economists polled by The Wall Street Journal had forecast declines of 15.9% and 10%, respectively.

Daniel Gerard, senior multiasset strategist at State Street Global Markets, said the pandemic presents investors with an economic calamity unlike either the Great Depression or the global financial crisis, and markets are cycling between fear and relief as headlines change.

“The market may be excited today about China’s trade data being better than expected, but tomorrow it may think it is not enough,” he said.

While China’s trade figures were much better than expected, there were no serious lockdowns outside the country until mid-March, and since then orders have been cut back, said Iris Pang, chief economist for Greater China at ING Bank NV in Hong Kong.

“This will heavily weigh on export and import figures for April and May, at least,” she said.

Elsewhere, Hong Kong’s Hang Seng Index edged up by 0.7%, Japan’s Nikkei 225 closed 3.1% higher, boosted by electronics and retail stocks, while South Korea’s Kospi Composite advanced 1.9%.

Mr. Gerard at State Street said any global economic recovery would be uneven, and while panic-selling had ceased, fundamental questions about corporate profits remain. Investors will need to distinguish temporary damage to earnings from longer-term hits, something that won’t be easy until the second half of the year, he said.

Oil prices edged up. The global benchmark Brent crude climbed 1%, trading at $32.04. The Organization of the Petroleum Exporting Countries and its allies agreed to jointly reduce production by 9.7 million barrels a day after a marathon series of talks from Thursday to Sunday.


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The rally is modest because the fall in energy demand from the economic slowdown still outweighs the production cuts made over the weekend, said Bjarne Schieldrop, chief commodities analyst at Nordic bank SEB.

“It’s very clear that demand loss is tremendous. They [OPEC] are not cutting enough in the short term to prevent inventory build.’’

Earnings season will begin this week, with some of the largest U.S. banks reporting in the coming days. JPMorgan Chase & Co will release its financial statements Tuesday, followed by Goldman Sachs, Bank of America and Citigroup Wednesday.

Also Tuesday, the International Monetary Fund will put out its world economic outlook, which will kick off a week of virtual meetings with a focus on the downturn caused by the coronavirus.


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China’s Trade Slump Eases In March, But Pandemic Set To Deepen Export Downturn

The plunge in China’s exports and imports eased in March as factories resumed production, but shipments are set to shrink sharply over coming months as the coronavirus crisis shuts down many economies and puts the brakes on a near-term recovery.

Financial markets breathed a sigh of relief after customs data on Tuesday showed overseas shipments fell 6.6% in March year-on-year, improving from a 17.2% slide in January-February, as exporters rushed to clear a backlog of orders after forced production shutdowns.

Economists had forecast shipments to drop 14% from a year earlier.


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Yet, while the trade figures were not bad as feared, analysts say the export and overall growth outlook for the world’s second-biggest economy remains grim as the pandemic has brought business activity across the globe to a standstill.

“The above-expectation March trade figures do not mean that the future is carefree,” said Zhang Yi, Beijing-based chief economist at Zhonghai Shengrong Capital Management.

Zhang said he expects first-quarter gross domestic product data on Friday will likely show a contraction of 8% – the first quarterly slump since at least 1992. Analysts’ forecasts for China’s first quarter GDP ranged widely between a contraction of 2% and 16%.

“A decline in exports throughout the second quarter has been the market consensus now and a drop of 20% or more is a high-probability event. For policymakers, more policies should be rolled out to address the possible societal issues stemming from mass-scale unemployment,” Zhang said.

The data showed imports slid 0.9% from a year earlier, also above market expectations of a 9.5% drop, which the customs attributed to improving domestic demand. They had fallen 4% in the first two months of the year.

The better imports picture partly reflected shipments that were stuck in ports being cleared and catch-up demand as authorities eased restrictions. Yet, domestic consumption was far from robust with key imports such as iron ore dipping in March, underlining the broad economic strains.

“Imports should hold up better given that domestic demand looks set to stage a further recovery in the coming months,” said Julian Evans-Pritchard, senior China economist at Capital Economics.

“But the quarter of China’s imports that feed into China’s export sector will continue to fall and hold back the recovery in imports.”

The overall trade surplus last month stood at $19.9 billion, compared with an expected $18.55 billion surplus in the poll and a deficit of $7.096 billion in January-February.

Stock markets in Asia extended their gains after China’s trade report, while risk sensitive currencies including the Australian and New Zealand dollars as well as the pound pulled ahead, mainly on relief on the less gloomy data. [MKTS/GLOB]

JOBS, INCOME, EXPORTS PRESSURED

China, where the novel coronavirus first emerged late last year, has reported 82,249 infections and 3,341 deaths as of April 13. Worldwide, infections have surpassed 1.8 million with over 119,000 deaths.

The pandemic’s sweeping impact on businesses and consumers has triggered an unprecedented burst of stimulus from policymakers in the past two months, with the World Trade Organization forecasting that goods trade would shrink more steeply this year than during the global financial crisis.

Beijing is trying to restart its economic engines after weeks of near paralysis to contain the pandemic that had severely restricted business activity, flow of goods and the daily life of people.

But as the virus rapidly spread to almost all of China’s trading partners, severely restraining overseas demand particularly in European and U.S. markets, Chinese factories’ export orders have been scrapped. Many privately-owned exporters have been forced to fire workers and warned about factory closures in not too distant future.

UBS Economist Tao Wang predicted that exports would decline by 20% on-year in the second quarter and 12% for the whole of 2020.

Wenzhou Juna Shoe Industry Co, which used to export 90% of its leather shoes to Russia, South Korea and Australia, had 30% of its orders cancelled last month, with clients delaying the shipments of another 20%, according to a report from China Central Television (CCTV) on Sunday.


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Half of its production lines were suspended overnight, said CCTV, citing the company manager Wan Jiayong.

Customs spokesman Li Kuiwen also warned about the difficulties facing foreign trade.

“Shrinking global demand is set to cause a shock to our country’s exports, and issues such as declining export orders have gradually emerged. The difficulties facing our foreign trade development cannot be underestimated,” said Li.

Indeed, both official and private factory surveys for March showed new export orders declined even further from February when production in the country was paused, with few signs of a strong near-term recovery.

Analysts say consumer appetite would also remain depressed as many people are worried about the possibility of new infections, job security and potential cuts to wages as the economy struggles, analyst warned.

“The sharp decline in exports and trade could put another over 10 million jobs related to exports at risk in the next couple of quarters,” UBS’ Wang said.


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U.S. Stocks Open Lower

U.S. stocks fell in early trading Monday, while oil prices faltered as a multinational agreement to cut crude production failed to assuage concerns that global oil markets will stabilize as the coronavirus pandemic erodes energy demand.

The S&P 500 index shed 0.4%, while the Dow Jones Industrial Average fell 91 points, or 0.4% and the Nasdaq Composite Index retreated 0.5%. Stock benchmarks in Tokyo, Shanghai and Seoul closed lower, while markets in Europe, Australia and Hong Kong remained shut for the Easter holiday.

Brent crude, the global gauge for crude prices, ticked down 0.5%, extending its rout this year to over 52%. Saudi Arabia, Russia and the U.S. agreed to lead a deal to collectively pull out more than 13% of world production. Combined with existing sanctions on Iran and Venezuela and outages in hot spots such as Libya, the measures could help withhold 20 million barrels a day of supplies from the market, OPEC said in the draft press release.


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Specific details have yet to be disclosed, including whether the U.S. would make additional cuts beyond its commitment to compensate for shortfalls in Mexico’s output reduction, and how the U.S. cuts would be implemented. The benchmark for U.S. crude futures wavered between gains and losses before ticking up 0.6% to $22.90 a barrel.

While the accord is aimed at curbing the glut in oil supplies and preventing a further crash in crude prices, traders remain concerned that a protracted recession in many parts of the world will weigh heavily on demand for oil. Amid travel restrictions and a halt in business activity, oil consumption is expected to fall by as much as 30 million barrels a day this month.

The agreement “unfortunately will fall well short of stabilizing oil markets,” Edward Moya, a senior market analyst for foreign-exchange broker Oanda, wrote in a note. “The number of holes in this production cut deal will make it hard for anyone to feel confident that a firm bottom is in place.”

Investors are also concerned that a too-speedy or careless end to lockdown measures in the U.S. and elsewhere may lead to a second wave of infections as calls for easing restrictions gain momentum. Some officials in President Trump’s administration have suggested reopening the U.S. economy by May 1 by allowing some business activity to resume.

“The most imminent challenge facing policy makers is a workable exit strategy that will prevent long-lasting global economic depredation,” Stephen Innes, chief global markets strategist at Sydney’s AxiCorp Financial Services, wrote in a note. “Top officials have no solid plan that will allow Americans to resume work out of harm’s way as the coronavirus pandemic rages.”

The U.S. leads the world in number of confirmed cases, with more than 550,000 infections known, and fatalities of more than 21,700. Globally, the number of confirmed coronavirus cases topped 1.8 million on Sunday.


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Later this week, investors will get insights into how the American financial sector is withstanding the turmoil in markets and the economy when major U.S. banks led by JPMorgan Chase, Bank of America and Goldman Sachs Group report quarterly earnings. Some blue-chip American companies including Johnson & Johnson are also scheduled to release results, offering a first look at the impact of social-distancing measures on corporate profits.

Almost 300 companies have withdrawn their financial guidance and about 175 companies have suspended stock buybacks or cut their dividend, according to a Wall Street Journal analysis of public companies in the S&P Composite 1500 Index. A record 17 million people have claimed unemployment benefits as the lockdown spurred a wave of layoffs and furloughs.

Wall Street’s consensus expectations for S&P 500 companies’ earnings remains too high, Goldman Sachs Group analysts said in a note. Expectations for companies’ 2021 earnings will weigh on equity markets as corporate leaders begin to offer fresh projections for their businesses, the analysts wrote.

In Asian equity markets, Japan’s Nikkei 225 dropped 2.3%, while South Korea’s Kospi lost 1.9% and the Shanghai Composite Index slid 0.5%.

“The extreme volatilities in the markets might be behind us,” said Homin Lee, Asia macro strategist at Lombard Odier in Hong Kong. He said the focus of the markets is on Covid-19, the disease caused the coronavirus, and the road map to reopening of the global economy.

Last week, the S&P 500 climbed 12% to record its best weekly performance since 1974. While the index is down 14% for the year, it has rallied 25% from its March 23 low.

The yield on the 10-year U.S. Treasury note ticked up to 0.754%.



Earnings Season Offers Next Test For Rebounding Stock Market

‘We haven’t really seen markets reflect the full extent of the damage that coronavirus is having to corporate profitability,

The kickoff of earnings season this week will give investors a first glimpse of the impact of the coronavirus shutdown on corporate profits—and potentially clues about the outlook for the rest of the year.

Those results will offer a test for a stock market that is attempting to rebound after a bruising selloff. The pandemic is expected to cause a severe economic contraction and a sharp decline in corporate earnings in 2020. What remains unknown is the extent of the damage.

Companies from General Electric Co. to FedEx Corp. and Starbucks Corp. have warned they can no longer forecast their own results in a period of such uncertainty. Businesses across the country say revenue has evaporated following stay-at-home orders and the closure of nonessential businesses, leading them to furlough employees and drastically cut spending as they try to stay afloat.

Despite the turmoil, stocks have rallied over the past three weeks on early indications that social-distancing practices are helping to slow the spread of the virus. The S&P 500 climbed 12% last week, its best weekly performance since 1974, and it has rallied 25% from its March 23 low. The index is still down 14% for the year.



“It’s been remarkable to watch markets just climb higher and higher,” said Emily Roland, co-chief investment strategist at John Hancock Investment Management. “We haven’t really seen markets reflect the full extent of the damage that coronavirus is having to corporate profitability.”

For that reason, some analysts worry the stock market is on the cusp of a reckoning and another painful selloff could be in store if corporate profits plunge. Others fear Wall Street’s current earnings estimates don’t fully reflect the extent of the expected carnage. Because projections for earnings are a key part of how stocks are valued, the opaque view into corporate profits suggests major indexes could see more volatility ahead.

Big banks including JPMorgan Chase & Co. and Bank of America Corp., along with health-insurance giant UnitedHealth Group Inc., transportation bellwether J.B. Hunt Transport Services Inc. and health-products company Johnson & Johnson, will be among the first big companies to open their books this week. While those results will be of great interest, investors will more carefully scrutinize comments from executives for indications of what will come later this year.

“There is more uncertainty for this quarter than almost any quarter I can remember,” said Bob Doll, chief equity strategist and senior portfolio manager at Nuveen. “My guess is somewhere between a half and three-quarters of analysts have yet to take a knife to their earnings [estimates] because they don’t know what knife to take to them and how deep to cut.”

The range of estimates reflects the deep uncertainty about the path ahead. FactSet projects a 9% year-over-year decline in earnings for all of 2020, based on analysts’ expectations for individual companies in the S&P 500, a sharp reversal from the 9.2% growth anticipated as last year ended.

Such a decline pales in comparison with the profit collapse forecast by big banks. BofA Global Research projects a 29% drop in per-share earnings this year, an estimate that incorporates “cataclysmic losses in travel, restaurants and other industries directly impacted by social distancing.” Goldman Sachs has predicted profits will tumble 33%, while cautioning that in a more painful slowdown, the decline could be 57%.

The second quarter is expected to see the brunt of the damage based on the current scale of the shutdown. Profits among companies in the S&P 500 are projected to drop 21% in the current quarter after sinking 11% in the first three months of the year, according to FactSet estimates. In the second half of the year, profits are expected to continue shrinking, but at a slower pace, falling 9.6% in the third quarter and 1.6% in the fourth.

“We’ve never, ever, ever seen a sudden stop of the economy,” said Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management. “That’s why this is going to be such a scrutinized petri dish, if you will, of an experiment for people to understand, really, what are the companies that have a true resilient and recurring revenue stream?”

First-quarter earnings forecasts have dropped for all 11 sectors in the S&P 500. The pain is projected to be particularly acute among companies in the consumer-discretionary group—a category that includes hotels, cruise lines and restaurants—where profits are expected to sink 32% from a year earlier, according to FactSet.

Marriott International Inc., for one, has begun furloughing what it expects will be tens of thousands of employees, while temporarily closing properties and curbing other spending. Shares of the company, which has withdrawn its financial guidance, are down 46% this year.

Meanwhile, earnings among energy companies, which have been hit both by an unprecedented drop in demand and the price war between Saudi Arabia and Russia, are expected to plummet 52%. Both Exxon Mobil Corp. and Chevron Corp. have slashed their capital spending plans in response to the crash in oil prices. Those stocks are off more than 30% in 2020.


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One of the brighter spots is expected to be the communication-services sector, which includes Facebook Inc. and Google parent Alphabet Inc. Earnings among those companies are projected to grow 7.8%, down from an expected 17% growth at the end of last year. Analysts are calling for profits at Facebook to more than double, despite a slowdown in advertising due to the pandemic. Its shares are down 15% this year, in line with the broader market.

“We’re looking forward to earnings season with a particular fascination to see what we learn about different companies’ business models,” Morgan Stanley’s Ms. Shalett said. “We’re also going to be put in a place where we have to all think really hard about to what extent is both consumer and business behavior changing, semi-permanently or permanently because of this trauma and this sudden stop in the economy.”



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Financial Markets – Top 5 Things to Watch This Week

Investors will be awaiting the International Monetary Fund’s updated forecasts for the global economy this week, which are expected to show a steep downward revision amid the impact of restrictions aimed at containing the spread of the coronavirus pandemic.

U.S. figures on weekly initial jobless claims have been the key indicator to watch and will continue to be in focus this week, while March U.S. retail sales figures are expected to show an unprecedented slowdown.



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A flurry of appearances by Federal Reserve policymakers along with first quarter earnings reports will be an important barometer of the economy. Meanwhile, the biggest supply cut ever contemplated by the world’s top oil producers continues to hang in the balance. Here’s what you need to know to start your week.

IMF forecasts
The IMF will release its detailed World Economic Outlook forecasts on Tuesday after the IMF and World Bank Spring Meetings, which will be held by video conference as a result of the pandemic.

IMF Managing Director Kristalina Georgieva warned last Thursday that the pandemic will turn global economic growth “sharply negative” in 2020, triggering the worst fallout since the 1930s Great Depression, with only a partial recovery seen in 2021.

In remarks prepared for delivery ahead of the Spring meetings, Georgieva said the “bleak outlook” applied to advanced and developing economies alike. “Everybody hurts. Given the necessary containment measures to slow the spread of the virus, the world economy is taking a substantial hit.”

Her speech also underlined the need for the meeting to offer debt relief and to agree an increase in the IMF’s financial firepower so it could help the world’s poorest countries through the crisis.

Economic data to show depth of fallout
Investors will once again be focusing on Thursday’s report on weekly jobless claims, which are expected to be in the millions again. The number of Americans seeking unemployment benefits in the last three weeks has topped 15 million.

“In its first month alone, the coronavirus crisis is poised to exceed any comparison to the Great Recession,” said Daniel Zhao, senior economist at Glassdoor. “The new normal for unemployment insurance claims will be the canary in the coal mine for how long effects of the crisis will linger for the millions of newly unemployed Americans.”

But this week’s calendar also features data on March retail sales and industrial production, giving markets a broader range of figures to quantify the economic impact of the virus. Retail sales are expected to post the largest drop at least three decades, after city and state shutdowns spread across the country and millions lost their jobs. Industrial production data could show the largest decline in the post-World War 2 era.





Fed speakers
Chicago Fed President Charles Evans, St. Louis Fed President James Bullard and Atlanta Fed President Raphael Bostic are all scheduled to make appearances this week, with investors keen to hear how policymakers view the scale of the economic downturn.

The Fed has slashed rates to zero, launched open-ended bond purchases and introduced a suite of emergency lending tools in response to the economic shockwaves unleashed by the virus.

Last week’s Fed minutes indicated that officials expect current ultra-loose monetary policy measures will remain in place against a “profoundly uncertain” backdrop, with the economy expected to enter a recession this year and not recover until next year in a worst-case scenario

The Fed is also to publish its Beige Book on Wednesday.

Earnings season
First quarter earnings season kicks off with the six largest banks in the U.S., including JPMorgan Chase (NYSE:JPM), Bank of America (NYSE:BAC) and Goldman Sachs (NYSE:GS) set to report.

Investors will be watching for any indications that banks are scaling back on lending, which could be a sign of a prolonged recession. Also, the Federal Reserve said Thursday it will be working directly with banks to deliver much of its financial support to businesses.

Pharmaceutical giant Johnson & Johnson (NYSE:JNJ) is due to report on Tuesday, while Abbott Laboratories (NYSE:ABT) is set to report on Thursday.

Earnings reports will also give an insight into just how badly retailers such as Bed Bath & Beyond (NASDAQ:BBBY), which is due to report on Wednesday, have been hit.

Oil output cut deal hangs in the balance
The biggest supply cut ever contemplated by the world’s top oil producers is hanging in the balance with Mexico resisting pressure from Saudi Arabia to sign up to global cuts worth nearly a quarter of output for participating countries.

The cuts are aimed at boosting prices from their lowest level in decades. Oil prices have collapsed as the coronavirus epidemic locked down economies around the world, decimating fuel demand and Saudi Arabia and Russia flooded the market in a price war.

The refusal by Mexican President Andres Manuel Lopez Obrador to compromise his plan to revive state oil company Pemex by agreeing to the cuts has shone the global spotlight on Mexico and angered Saudi Arabia.

In a compromise hammered out with U.S. President Donald Trump, Lopez Obrador said on Friday the United States had offered to cut an additional 250,000 bpd on Mexico’s behalf, bringing them close to the target.

However, Saudi Arabia – the heavyweight of global oil diplomacy – has balked at that and dug in its heels, despite some other producers from the group of OPEC nations and their allies – known as OPEC+ – calling for the cuts to go ahead regardless.

OPEC+ made its commitment to cut a record 10 million barrels a day conditional on Mexico’s agreement.




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Pfizer Identifies Lead Coronavirus Drug Candidate

Pfizer Inc. has found a promising but early potential coronavirus treatment, which the drugmaker aims to begin testing in patients this summer.

Laboratory research suggests the drug candidate blocks the new coronavirus from replicating, Pfizer research-and-development chief Mikael Dolsten said in an interview. The findings indicate the experimental drug could slow or stop the spread of the virus in patients with mild-to-moderate symptoms, though human testing will be necessary for proof.


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The early progress is among several developments in Pfizer’s multipronged efforts to find coronavirus drugs and vaccines.

Pfizer will also start testing its approved rheumatoid-arthritis drug Xeljanz in coronavirus patients in Italy this week to see whether the therapy has a benefit, Dr. Dolsten said. And the company is planning to publish research on whether one of its antibiotics helps.

In addition, Pfizer has been working with BioNTech BNTX +7.88% SE of Germany to develop a vaccine based on an emerging gene-based technology. Pfizer said it plans to move into clinical trials as early as the end of this month with four different vaccines simultaneously, and aims to move the best one forward in future studies.

“I feel confident that we will win, battle by battle, to turn around this viral war against our society,” Dr. Dolsten said.

There are no approved medicines to treat or prevent the new coronavirus, which causes the disease known as Covid-19. The testing required to assure the drugs and vaccines work safely is expected to take months.

Dozens of companies and university researchers have been hustling to develop therapies or vaccines against the virus. More than 140 are in development world-wide, most in early stages, including about a dozen already in clinical trials, according to Informa Pharma Intelligence.

Among the other drugmakers working on treatments are Eli Lilly & Co., Gilead Sciences Inc. and Takeda Pharmaceutical Co.

Pfizer, based in New York City, assembled a team of 50 researchers from various departments to work on the coronavirus, and ramped up projects exploring different potential medicines.

One challenge the drugmaker confronted was reconstituting antiviral research after disbanding the department in 2009. To limit interactions among personnel, the company’s coronavirus team has yet to meet in person.

The team reviewed compounds that have shown activity against other coronaviruses, including severe acute respiratory syndrome, or SARS, Dr. Dolsten said.

Pfizer’s lab research suggests that its lead drug and similar candidates are strong blockers of a key enzyme, known as a protease, that helps viruses replicate, Dr. Dolsten said. Pfizer plans to begin studying the lead drug in patients as early as August, several months ahead of schedule.

“Time is urgent here,” he said. “Every hour, every day counts.”

To be able to make sufficient supplies of the drug candidate for testing, Pfizer several weeks ago bought the raw materials needed to manufacture the medicine, said Charlotte Allerton, who leads Pfizer’s medicine design.

Pfizer expects the trial in Italy evaluating Xeljanz’s effect on coronavirus patients to finish in July. The company says the drug could help damp an overactive immune response that occurs in some patients and can lead to respiratory failure and death.

Other anti-inflammatory drugs, such as Roche Holding AG RHHBY -2.81% ’s Actemra, have shown signs of working on coronavirus patients who suffer from respiratory problems. Xeljanz functions differently than Actemra, and could be an alternative for patients who don’t respond to anti-inflammatory drugs such as Roche’s drug, Dr. Dolsten said.

Pfizer expects to publish its findings on the anticoronavirus powers of the antibiotic azithromycin, which Pfizer sells under the brand name Zithromax. Many doctors, lacking proven options, are treating Covid-19 patients with the antibiotic and antimalaria drugs.


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Pfizer also plans to begin two studies with the U.K.-based Liverpool School of Tropical Medicine to investigate whether coronavirus patients are at higher risk of developing pneumococcal pneumonia and if having both infections leads to more-severe disease.

The company’s partnership with BioNTech is exploring a vaccine based on the gene-based technology known as messenger RNA. Messenger RNA, or mRNA, carry instructions from DNA to the body’s cells to make certain proteins.

No mRNA vaccines have been approved. Moderna Inc. has begun testing its mRNA coronavirus vaccines in patients. Inovio Pharmaceuticals Inc. has begun testing a DNA vaccine.

Last month, Pfizer said it would make some of its research on the virus available publicly online for other researchers. The drugmaker also said it would offer available manufacturing capacity to other companies, if they win approval and require help making their medicines.





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Global Stocks Edge Higher As Trading Volumes Ebb

Global stocks wobbled Thursday as trading volumes slid ahead of the long Easter holiday weekend, while oil markets were buoyed by optimism that major crude producers including Russia may agree to cut output.

Futures tied to the Dow Jones Industrial Average drifted up 0.3%, following a 3.4% rally in the blue-chips gauge on Wednesday. The pan-continental Stoxx Europe 600 index edged up 0.5%.



U.S. crude futures rallied 5%, or by $1.28 a barrel, while Brent crude, the global benchmark for oil prices, gained almost 4%.

Speculation that the Organization of the Petroleum Exporting Countries and its allies were considering steep cuts to production gave U.S. energy stocks a boost on Wednesday. That optimism was boosted further by reports that Russia was mulling deeper cuts than traders had expected.

OPEC members and their allies, including Russia, are scheduled to hold a crucial videoconference later in the day. A Texas regulator also said the U.S. could reduce production by four million barrels of oil a day.

“If you get a cut in output, I don’t think necessarily you’re going to see oil prices back up to $70, but you won’t see oil prices go to single digits,” said Justin Onuekwusi, head of retail multiasset funds at Legal & General Investment Management. “You’re going to create a floor under the oil price and remove some of the uncertainty from markets overall.”

Investors are also looking ahead toward a gradual economic recovery in the second half of the year in the U.S., following a severe economic contraction and a spike in unemployment. Nearly 85% of the economists in a Wall Street Journal survey predicted annualized growth rates of 6.2% in the third quarter, followed by 6.6% in the fourth quarter.

Globally, the number of confirmed coronavirus cases rose to nearly 1.5 million, with more than 88,500 deaths, according to data compiled by Johns Hopkins University. The disease it causes, known as Covid-19, has killed more than 14,800 people in the U.S. in slightly over a month.

“Investors are not putting the risk of a resurgence on the top of their minds right now,” said Eli Lee, head of investment strategy at Bank of Singapore. The risk of a second or subsequent wave of infections would bear watching as this could prolong containment measures, leading to a longer recession than expected, he cautioned.

The yield on the 10-year U.S. Treasury note fell to 0.748%, from 0.762% on Wednesday. Bond yields fall as prices rise.

Later in the day, new figures for U.S. initial jobless claims for the week ending April 4 are expected to remain elevated at about 5 million as swaths of the economy have shut down. Nearly 10 million Americans—more than the entire labor force of New York state—filed applications for unemployment insurance during the two-week span ending March 28. The data is due out at 8:30 a.m. ET.

“We’re seeing an unprecedented use of the word unprecedented,” said Altaf Kassam, head of investment strategy for State Street Global Advisors in Europe, the Middle East and Africa. “The graph just looks nuts. We’ve never had this kind of enforced closure of an economy before, especially the largest economy.”

While the weekly numbers are likely to be “huge,” many of the claims will probably prove to be temporary and not permanent job losses, according to Anton Brender, chief economist at Candriam.


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Many of the world’s major stock markets will be closed Friday for public holidays, although markets in South Korea, mainland China and Japan will be among those trading.

In the Asia-Pacific region, Australia’s stock benchmark closed the week 6.3% higher. That was its third consecutive week of gains, although it remains nearly 25% below a record close on Feb. 20. Chinese and South Korean equity benchmarks ended the day higher, while Japan’s Nikkei 225 was flat.






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Stock Market Today: Dow, S&P Start Higher, European Stocks Drop As Investors Point To ‘Vacuum Of Data’

Share benchmarks rose Wednesday, following a roller-coaster session on Wall Street that saw a strong rally in the major benchmark indexes ending abruptly with a precipitous drop.

The Dow Jones Industrial Average edged 1.4% up, or 330 points. The S&P 500 rose 1.3%, while the tech-heavy Nasdaq Composite Index also advanced 1.3%. Tuesday, the blue-chip index gave up a 4.1% advance to close 0.1% lower.

“A vacuum of data is leading to this volatility, rather than a shift in sentiment,” said Edward Park. deputy chief investment officer at Brooks Macdonald. The shifting mood in oil markets is also impacting sentiment among equity investors, he said, as traders speculate about the outcome of a meeting between major crude oil producers on Thursday.


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The indicators came on top of the news that European Union finance ministers had suspended talks on an economic crisis response on Wednesday morning, underscoring the deep differences within the bloc over how to share the mounting costs of the health crisis. Ministers had hoped to agree to a package of measures that could have provided half a trillion euros worth of support for the economy.

“There’s disappointment,” said Florian Hense, European economist at Berenberg Bank. “The longer it takes for finance ministers and leaders to come up with a solution, the weaker their ability to sell it to their home audience. We’re not talking about economics any longer, but politics.”

Any agreement reached would be a welcome signal for markets, Mr. Hense said. Investors continued to pull out of Italian bonds, which are considered riskier assets. The yield on 10-year Italian bonds rose to 1.699%.

In a sign of investors’ wavering risk appetite, the yield on the 10-year U.S. Treasury ticked up to 0.764%, from 0.735% Tuesday, after declining earlier in the day.

In trying to assess the depth of the looming recession that will be triggered by the coronavirus shutdown, some investors are examining the support offered by the Federal Reserve, and how quickly it will prove to be effective in bolstering economic activity.

As well as slashing interest rates, the central bank announced other aggressive measures in March, pledging to buy government bonds, corporate-bond funds and municipal debt. It has boosted the short-term cash markets and even arranged to lend directly to companies.

Bear markets tend to last longer than we think,” said Gregory Perdon, co-chief investment officer at Arbuthnot Latham. “Although we have shock and awe with relaunching QE, we don’t know that the on-the-ground economic support is going to be there quickly.”

In commodities, U.S. crude futures climbed 1.5% to $24.01 a barrel. American Petroleum Institute data released late Tuesday reportedly showed U.S. crude inventories rose by more than expected. The prices are too low for U.S. producers, leading to a significant slowdown in drilling activity, ING strategists said. The Energy Information Administration’s short-term energy outlook forecasts that U.S. oil output in 2020 will decline by 470 million barrels a day from the previous year, taking it down from a previous forecast of 770 million barrels a day growth.

The U.S. death toll from the new coronavirus rose sharply, with nearly 50% more people killed Tuesday than any previous day in the epidemic, according to a Wall Street Journal analysis of data from Johns Hopkins University. European countries with falling infection rates began easing their restrictions, while some Asian leaders called for extended lockdowns to fight the pandemic.

In Asia, Japan’s Nikkei 225 closed 2.1% higher. Late Tuesday, the government said it plans to pay households and businesses directly as part of a nearly $1 trillion economic package. It could subsequently use stimulus money to encourage consumer spending and travel.


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Investors are watching closely for when U.S. infections peak and start to decline, and when shutdowns are lifted, according to Kelvin Tay, regional chief investment officer at UBS Global Wealth Management in Singapore. In time, he said, investor focus would shift to 2021 corporate earnings, and how quickly economic activity can recover.

Since the Federal Reserve last month made use of a range of tools—adopting “the entire playbook” it developed during the 2008 global financial crisis—in quick succession, market functioning has improved, Mr. Tay said. “The markets have exited the panic-selling mode.”

Later in the day, the Fed is scheduled disclose what was discussed at its meetings in the first half of March, offering fresh insights into policy makers’ willingness to take additional steps as the outlook deteriorates. Costco Wholesale will also report March sales after the closing bell in New York, giving investors a view on how the pandemic has affected the retailer’s operations.







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Oil Rises As Markets Eye OPEC, Russia Meeting On Output Cuts

Oil rebounded on Wednesday after a two-day fall, lifted by hopes that a meeting between OPEC members and allied producers on Thursday will trigger output cuts to shore up prices that have crumbled amid the coronavirus pandemic.

Brent crude was up by 21 cents, or 0.8%, at $32.08 per barrel by 0639 GMT after falling 3.6% on Tuesday. U.S. West Texas Intermediate (WTI) crude rose 82 cents, or 3.8%, to $24.45 a barrel after dropping 9.4% in the previous session.


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Thursday’s videoconference meeting between members of the Organization of Petroleum Exporting Countries (OPEC) and its allies, including Russia, is widely expected to be more successful than their gathering in early March. That ended in failure to extend cuts, and a price war between Saudi Arabia and Russia amid slumping demand.

But doubts remain over the role of the United States in any production curbs.

“Whether the United States will join output cuts is closely watched as the market’s focus remained on OPEC meeting,” said Kim Kwang-rae, commodity analyst at Samsung Futures in Seoul. “Oil prices have been volatile as the market is in wait-and-see mode.”

Saudi Arabia, other OPEC member countries and Russia, a grouping known as OPEC+, are likely to agree to cut output, but that accord could be dependent on whether the United States would go along with cuts. The U.S. Department of Energy said on Tuesday that U.S. output is already declining without government action.

Iran’s Oil Minister, Bijan Zanganeh, said Iran does not agree with holding any OPEC+ meeting without a clear-cut proposal and expected outcome from such talks, according to a letter sent to OPEC and seen by Reuters.

“Saudi Arabia and Russia continue to hammer out a deal … What is clear is that the United States must be involved,” ANZ Research said in a note.

U.S. crude production is expected to slump by 470,000 bpd and demand is set to drop by about 1.3 million bpd in 2020, the U.S. Energy Information Administration (EIA) said on Tuesday.

U.S. crude inventories jumped by 11.9 million barrels to 473.8 million barrels in the week to April 3, according to data from the American Petroleum Institute (API) released on Tuesday.

With a drop in fuel demand amid the virus outbreak, gasoline stocks also rose by 9.4 million barrels, marking the biggest one-week gain in the API figures since January 2017.

Official data from the EIA is due at 10:30 a.m. EDT (1430 GMT) on Wednesday.





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Stocks Climb, Trying To Extend Winning Streak

U.S. stocks rose sharply Tuesday, buoyed by early indications that the spread of the coronavirus pandemic was slowing in some hot spots around the world.

The Dow Jones Industrial Average rallied 2.8% in midday trading, a day after rising almost 8%. The S&P 500 and the Nasdaq Composite also jumped, climbing 2.3% and 1.5% respectively. All three indexes are attempting to rally for the third time in four sessions, though they remain down about 20% from their mid-February highs.

New York Gov. Andrew Cuomo said Tuesday that the state’s hospitalization rate has showed signs of slowing, and other hard-hit countries in Europe, including Italy and Spain, have reported a slowdown in new infections following strict containment measures.


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“It’s hard to reject the view that things are improving,” said Paul O’Connor, head of multiasset at Janus Henderson. “Markets have been celebrating this in the last couple of days.”

Still, the trends are preliminary and authorities have warned that the coronavirus infections in the U.S. and U.K. are likely to worsen in the coming week. Even as demand for intensive care units has flattened in New York, Mr. Cuomo said Tuesday that deaths related to the virus hit a record Monday. So far, nearly 5,500 people have died from the virus in the state, representing almost half of all U.S. deaths.

Even more, economic indicators have shown that a deep recession may be looming. The Mortgage Bankers Association said Tuesday that mortgage forbearance requests grew 1,896% between the weeks of March 16 to March 30. The spike comes as millions of Americans have sought unemployment benefits after the pandemic shuttered businesses.

Markets have swung sharply in recent weeks as investors have tried to make sense of a fast-spreading pandemic that has warranted unprecedented responses by the Federal Reserve and U.S. government. Monday’s gain marked the 12th consecutive trading day that the Dow moved up or down at least 1%.

All 11 sectors of the S&P 500 marched higher Tuesday. Only two of the 30 stocks in the Dow Jones Industrial Average, Merck and Pfizer, ticked lower.

Travel and leisure stocks were again among the best performers in the U.S. and Europe. United Airlines Holdings jumped 8.3%, American Airlines Group rose 15% and Delta Air Lines added 4.2%. Among cruise stocks, Royal Caribbean Cruises gained 21% and Carnival rose 17%. All five stocks remain down more than 50% for the year.

Meanwhile, in London, EasyJet soared 20% after the carrier tapped a U.K. government-aid program for short-term credit. The company’s ability to access the funding suggests that it could withstand the economic downturn, provided that the spread of the coronavirus continues to slow, according to Michael Hewson, chief market analyst at brokerage CMC Markets.

“Markets are pricing in a return to normality for airlines sooner rather than later,” Mr. Hewson said. That optimism is also driving hotel stocks higher, he added.
The rise in risk appetite led some investors to sell the safest government bonds. The yield on the 10-year U.S. Treasury note rose to 0.749%, from 0.675% Monday. Yields rise as bond prices fall.

Oil prices also ticked higher, with the global benchmark Brent crude advancing 0.3% to $33.15 a barrel.


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In currency markets, the ICE Dollar Index slipped 0.7%. The greenback has been wavering amid renewed risk appetite, according to Jordan Rochester, a currency strategist at Nomura.

“It’s definitely a risk-on day,’’ leading some investors to sell the dollar, he said.





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Oil Rises 3% On Hopes For Output Cut

Oil prices gained on Tuesday as hopes rose that the world’s biggest producers of crude will agree to cut output as the coronavirus pandemic crushes demand, even as analysts warn a global recession may be deeper than expected.

Brent crude (LCOc1) was up by 93 cents, or 2.8%, at $33.98 a barrel by 0431 GMT after falling more than 3% on Monday. U.S. crude (CLc1) was up by 79 cents, or 3.03%, at $26.87 a barrel, having dropped nearly 8% in the previous session.



The world’s main oil producers including Saudi Arabia and Russia are likely to agree to cut output at a meeting on Thursday, although that would depend on the United States doing its share, sources told Reuters.

But the threat of a major recession hangs over the market due to the halt of much economic activity as a result of the coronavirus pandemic, with half the global population under some form of lockdown or social distancing measures.

“Oil producers have to cut deeply and quickly if they want to avert total saturation of oil markets,” Eurasia Group said.

Worldwide oil demand has dropped by as much as 30%, or about 30 million barrels per day, coinciding with moves by Saudi Arabia and Russia to flood markets with extra supply after an agreement on withholding output fell apart.

Oil prices slumped on Monday after Saudi Arabia and Russia delayed a meeting to agree on output cuts till Thursday.

The Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russia, a grouping known as OPEC+, had been curtailing production in recent years amid a rapid expansion of U.S. output that made the country the world’s biggest crude producer.

There are also questions over whether the U.S. would join any coordinated action.

U.S. President Donald Trump said on Monday that OPEC had not asked him to push domestic oil producers to cut their production to buttress prices. He also said that U.S. output was declining in response to falling prices.

“I think it’s happening automatically but nobody’s asked me that question yet so we’ll see what happens,” the president told a press briefing on Monday afternoon.

Coordinated action by U.S. oil producers to reduce output would typically be a violation of antitrust laws.

A global recession that economists in a Reuters poll say is under way will likely be more serious than expected a few weeks ago due to the viral outbreak, the latest survey showed.

“We expect energy prices to hover around current levels until economic activity recovers,” Capital Economics said in a note.


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Economic Calendar – Top 5 Things to Watch This Week

The main focus will once again be on U.S. labor market, with Thursday’s initial jobless claims report, which has already shown an unprecedented jump of around 10 million over the past two weeks. Oil prices look set to crater again on Monday as the price war between Saudi Arabia and Russia intensifies. Meanwhile, Wednesday’s Federal Reserve meeting minutes may give some insight into the mindset of policymakers as they delivered emergency rate cuts. Here’s what you need to know to start your week.

1-Trump warns Americans to brace for big spike in virus fatalities
Trump has told Americans to brace for a big spike in coronavirus fatalities in the coming days, as the country faces what he called the toughest two weeks of the pandemic.

“There’s going to be a lot of death,” Trump said at the White House briefing on Saturday.

The United States has the world’s highest number of known cases of COVID-19, the flu-like respiratory disease caused by the coronavirus. More than 306,000 people have tested positive in the United States and over 8,300 have died, according to a Reuters tally.

White House medical experts have forecast that between 100,000 to 240,000 Americans could be killed in the pandemic, even if sweeping orders to stay home are followed.

“We are coming up to a time that is going to be very horrendous,” Trump said. “We probably have never seen anything like these kind of numbers. Maybe during the war, during a World War One or Two or something.”

2-Oil set to crater as OPEC+ meeting postponed
Oil price fluctuations have added an extra layer of complication to the coronavirus related market turbulence, crashing 70% from January highs before bouncing on Trump’s claim to have brokered a Saudi-Russia deal to cut output.

But prices look set to drop sharply on Monday after OPEC and Russia postponed a Monday meeting to discuss oil output cuts until April 9, as a war between Russia and Saudi Arabia over market share intensified.

Oil recovered from last week’s lows of $20 per barrel with Brent settling at $34.83 on Friday, still far below the $66 level at the end of 2019. Prices had their biggest one-day gain ever on Thursday when Trump said he expected Russia and Saudi Arabia to announce a major production cut.

On Saturday, Trump focused instead on tariffs as a response to the oil price crash.

If I have to do tariffs on oil coming from outside or if I have to do something to protect our … tens of thousands of energy workers and our great companies that produce all these jobs, I’ll do whatever I have to do,” the president said.



3-Jobless claims set to surge again
Thursday’s data on initial jobless claims will be the main release for markets this week. Jobless claims have surged to record levels in the past two weeks, as containment measures to try and slow the spread of coronavirus mean shutdowns are becoming widespread across the U.S. As a result, companies are increasingly shutting their doors and laying-off staff.

Economists are forecasting a reading around the five million mark for initial claims this week.

“With risks skewed towards the containment measures lasting into May, we would not be surprised to see unemployment hit 15% in coming months with our best guess being that the economy contracts 40% in 2Q,” analysts at ING wrote in a note.

4-Fed minutes
The Fed is to publish what will be closely watched meeting minutes on Wednesday, which investors expect to outline details on the decisions to deliver emergency rate cuts and inject waves of stimulus into the economy.

Calendars released by the U.S. central bank on Friday showed that Chairman Jerome Powell and Trump held two phone calls on Feb. 7 and again briefly on Feb. 26. What exactly they discussed was not immediately clear, but Powell released a statement on Feb. 28 acknowledging evolving risks from the virus and promising the central bank would act as appropriate to support the economy.

The Fed delivered an emergency rate cut on March 3.

5-Eurozone to debate coronabonds
Euro zone finance ministry officials are to hold discussions this week about how best to aid poorer states buckling under the coronavirus strain. It’s safe to say a solution that satisfies everyone won’t come by the April 9 deadline. The same divisions remain within the bloc — Germany and the Netherlands are fiercely opposed to proposals for joint ‘coronabonds’, favored by France, Italy and Spain.

Joint bonds would assure poorer countries — and investors — that prosperous bloc members stand behind them, keeping borrowing costs in check. But likelier options this time around include credit lines from the euro zone’s bailout fund, more lending from the European Investment Bank and using a joint long-term budget directly or for guarantees for leveraged borrowing.

Germany will probably dodge joint bonds this time. But another whatever-it-takes moment is inevitable.


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Oil Production Cut: OPEC+ Meeting Delayed

OPEC and Russia have postponed a Monday meeting to discuss oil output cuts until April 9, OPEC sources said on Saturday, as a dispute between Moscow and Saudi Arabia over who is to blame for plunging crude prices intensified.

The delay came amid pressure from U.S. President Donald Trump for the Organization of the Petroleum Exporting Countries led by Saudi Arabia and its allies, a group collectively known as OPEC+, to urgently stabilise global oil markets.

Oil prices hit an 18-year low on March 30 due to a slump in demand caused by lockdowns to contain the coronavirus outbreak and the failure of OPEC and other producers led by Russia to extend a deal on output curbs that expired on March 31.



OPEC+ is working on a deal to cut the production of oil equivalent by about 10% of world supply, or 10 million barrels per day, in what member states expect to be an unprecedented global effort including the United States.

Washington, however, has yet to make a commitment to join the effort and Russian President Vladimir Putin on Friday put the blame for the collapse in prices on Saudi Arabia – prompting a firm response from Riyadh on Saturday.

“The Russian Minister of Energy was the first to declare to the media that all the participating countries are absolved of their commitments starting from the first of April, leading to the decision that the countries have taken to raise their production,” Saudi Energy Minister Prince Abdulaziz bin Salman said in a statement reported by state news agency SPA.

Putin, speaking on Friday during a video conference with government officials and the heads of major Russian oil producers, said the first reason for the fall in prices was the impact of the coronavirus on demand.

“The second reason behind the collapse of prices is the withdrawal of our partners from Saudi Arabia from the OPEC+ deal, their production increase and information, which came out at the same time, about the readiness of our partners to even provide a discount for oil,” Putin said.

The Saudi Foreign Minister Prince Faisal bin Farhan Al Saud disputed Putin’s claims, saying Russia had withdrawn and that statements about the kingdom’s withdrawal from the OPEC+ deal was devoid of truth, state agency (SPA) reported on Saturday.

OPEC sources, who asked not be identified, said the emergency virtual meeting planned for Monday would likely now be postponed until April 9 to allow more time for negotiations.

OPEC sources later downplayed the Saudi-Russia row, saying the atmosphere was still positive, although there was no draft deal yet nor agreement on details such as a reference level from which to make the production cuts.

“The first problem is that we have to cut from the current production level now, not to go back to the one before the crisis,” one of the OPEC sources said. “The second issue is the Americans, they have to play a part.”

OIL RISES FROM LOWS

Oil recovered from this week’s lows of $20 per barrel with Brent settling at $34.11 on Friday, still far below the $66 level at the end of 2019. Prices had their biggest one-day gain ever on Thursday when Trump said he expected Russia and Saudi Arabia to announce a major production cut.

The United States is not part of OPEC+ and the idea of Washington curbing production has long been seen as impossible, not least because of U.S. antitrust laws.

Still, the oil price crash has spurred regulators in Texas, the heart of U.S. oil production, to consider regulating output for the first time in nearly 50 years.



But U.S. Energy Secretary Dan Brouillette, in a call with oil industry leaders on Friday, did not mention the possibility of U.S. production cuts, a source who listened to the call said.

On Saturday, U.S. President Donald Trump focused instead on tariffs as a response to the oil price crash.

“If I have to do tariffs on oil coming from outside or if I have to do something to protect our … tens of thousands of energy workers and our great companies that produce all these jobs, I’ll do whatever I have to do,” Trump told reporters in a briefing about the coronavirus outbreak.

“The President has now told us what Plan B is: tariffs,” said Robert McNally, president of Rapidan Energy Group in Bethesda, Maryland.

Russian Energy Minister Alexander Novak told Russian state media he understood that the United States had legal restrictions on output cuts but it should still be flexible.

Other oil producers that do not belong to OPEC+ have indicated a willingness to help. Canada’s Alberta province, home to the world’s third-largest oil reserves, is open to joining any potential global pact.

Norway, Western Europe’s largest oil and gas producer, said on Saturday it would consider cuts to its oil output if a wide global deal is agreed.

Mexican President Andres Manuel Lopez Obrador on Saturday called on Russia and Saudi Arabia to reach a deal soon to end their price war.

The International Energy Agency warned on Friday that a cut of 10 million bpd would not be enough to counter the huge fall in oil demand. Even with such a cut, inventories would increase by 15 million bpd in the second quarter.




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U.S. Stock Futures Rebound, Oil Surges

U.S. stock futures recovered some ground Thursday, while oil prices surged on hopes of an end to the Saudi Arabia-Russia price war.

Contracts tied to the S&P 500 rose 1.6%, suggesting that the index may recover some of its losses when trading gets under way in New York. U.S. equities endured their worst start to a new quarter on record Wednesday.

Brent-crude, the global benchmark for oil, jumped 10% to $27.22 a barrel after President Trump said he was confident Saudi Arabia and Russia would resolve their dispute in coming days. Market sentiment was also buoyed by a new report that China plans to buy crude for its strategic reserves, analysts said.

A combination of eroding demand, driven by the sharp slowdown in economic output as countries grapple with the coronavirus pandemic, and a flood of new supply recently pushed U.S. crude-oil prices close to their lowest level since 2002.

Traders are increasingly optimistic that major producers will intervene in the oil market to bolster prices, according to DNB analyst Helge Andre Martinsen. However, the pandemic’s impact on the economy means the oil market will be significantly oversupplied in the coming months regardless of whether producers cut back output, Mr. Martinsen cautioned.

The jump in oil prices lifted shares in U.S. energy producers before the opening bell in New York. Exxon Mobil and Chevron each rose more than 5%. Stocks in European energy majors also advanced, with Royal Dutch Shell up 8.8%.


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U.S. government bonds rallied in a sign that investors are seeking assets they perceive to be the safest. The yield on 10-year Treasury notes slipped to 0.591%, from 0.630% Wednesday. Yields drop when bond prices climb.

The Federal Reserve changed Wednesday rules around how banks account for their supersafe assets, easing capital constraints for lenders. The steps were also aimed at preventing trading hiccups in the market for U.S. government bonds, and easing credit flow.

Investors are once again flocking to the safety of Treasurys,” said Colin Low, senior macro analyst at FSMOne.com in Singapore. “The mini-rally seen last week was a typical relief rally that was seen in previous bear markets such as in 2008 and 2000. The economic situation in many markets is going to be uglier, as more data come in.”

The pandemic’s toll on the U.S. economy is likely to become clearer Thursday when the Labor Department releases weekly data on new unemployment claims. Around six million people may have filed for unemployment benefits in the week through March 28, according to economists at Goldman Sachs. That would be almost double the highest number on record, set the previous week.

Some investors also view what appears to be a slowdown in the rate of infection in Italy, the first Western country to suffer a major coronavirus emergency, as a sign that a similar lockdown approach may help elsewhere. The country has become a test case for whether the U.S. and the rest of Europe might suppress the pandemic fast enough to avoid a deep economic crisis while using strategies less draconian than China’s.

Italian authorities are cautioning it will take until after Easter to cut new infections enough to begin easing restrictions on travel and work to reopen parts of the economy. New daily infections have fallen from a peak of over 6,500 on March 21, with about 4,800 people testing positive Wednesday. Still, that represented a rise from 4,100 new cases Tuesday, according to the Johns Hopkins University.

“What we’re going to see from here on is market movements are going to be dictated by the virus,” said Seema Shah, chief strategist at Principal Global Investors.

The decrease in Italian deaths showed there was “a glimmer of light at the end of the tunnel” in the U.S. and other countries, she said. “We still need to see that full peak in infection rates in a number of countries” for global stock markets to recover meaningfully.

The Stoxx Europe 600 index was largely flat Thursday. Asian stock markets ended the day mixed. The benchmark in Japan lost 1.4%, while China’s Shanghai Composite rose 1.7%.



The pandemic has infected more than 935,000 people globally and killed more than 47,000. The death toll in the U.S. surpassed 5,100, as confirmed cases climbed to over 215,000. The World Health Organization has warned that the number of infected could top one million in a few days.

“Globally, as a whole, the Covid-19 situation is worsening,” said Mr. Low at FSMOne.com, referring to the illness caused by the novel coronavirus.

“Investors are getting more panicky. They are fully aware that corporate earnings and the global economy will be bad for the first and second quarters. But beyond that, there’s no visibility on how these numbers will look like in the third and fourth quarter because of the fluidity of the Covid situation,” he said.





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Stock Market: U.S. Futures And Global Stocks Fall, Investors Rush To Safe-Haven Assets

“In the U.S., we’re at the beginning of a downturn,” said Steven Englander



U.S. stock futures declined Wednesday, after leading benchmarks closed out their worst quarter since the global financial crisis.

Futures tied to the Dow Jones Industrial Average and S&P 500 ticked down 2.6% early Wednesday.

European stocks also declined. The pan-continental Stoxx Europe 600 index dropped 2.9% with Germany’s DAX benchmark down 3.2% and the FTSE 100 down 3.5%.

As investors rushed to safe-haven assets, the yield on the 10-year U.S. Treasury note fell about 0.02 percentage point to 0.661%. Bond yields fall as prices rise. The ICE Dollar Index, which tracks the dollar against a basket of currencies, rose 0.4%.

“In the U.S., we’re at the beginning of a downturn,” said Steven Englander, global head of G-10 foreign-exchange research and North America macro strategy at Standard Chartered Bank. “We’re likely to see more unemployment, and the early bottom could come in May, but that is very speculative. For that to happen, we need a lot of good luck and serious implementation of economic and health-care policy.”

Mr. Englander said stimulus packages were positive for the economy, and would help American employees get through the next two months but that there might be a need for “trillions more.” On Tuesday, President Trump called for a new infrastructure-focused spending bill worth $2 trillion.

The Federal Reserve said Tuesday that it would launch a temporary lending facility that for the first time would allow foreign central banks to convert their holdings of Treasury securities into dollars, its new bid to alleviate strains in global markets.

Mr. Englander said the program would improve international access to dollar-based funding.

“Investors will take it seriously,” he said.

The S&P 500 dropped 1.6% Tuesday, taking its year-to-date losses to 20%, the biggest quarterly decline since 2008. The Dow Jones Industrial Average fell 1.8%. It slid 23% over the quarter, its worst showing since 1987.


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In Asia, markets were mixed Wednesday. Japan’s Nikkei 225 lost 4.5% and Hong Kong’s Hang Seng was 2.2% lower. Meanwhile, Australia’s ASX 200 gained 3.6%.

In Hong Kong, shares in HSBC Holdings PLC tumbled more than 9% to their lowest since 2009, while stock in rival Standard Chartered PLC also fell. The two lenders, which also have U.K. listings, were among four banks that said Tuesday they would cancel unpaid 2019 dividends at the Bank of England’s request.






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French Manufacturing Plunges Into Deepest Slump In Seven Years

French manufacturing activity fell in March at the fastest pace in more than seven years as a nationwide lockdown to contain the coronavirus outbreak hits companies and their clients, a monthly survey showed on Wednesday.

Data compiler IHS Markit said its final Purchasing Managers’ Index (PMI) fell to 43.2 points from 49.8 in February, slightly higher than a preliminary reading of 42.9.

The plunge to its lowest point since January 2013 brought the index far away from the key 50-point line dividing expansions in activity from contractions.


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Meanwhile, manufacturers’ output and the flow of orders for new business fell to their lowest levels since the 2008-2009 global financial crisis that unleashed one of the deepest recessions in decades in many major economies.

As the coronavirus spread in France, the government imposed a lockdown on March 17, forcing large swathes of the euro zone’s second-biggest economy to shut down.

“The supply of goods is diminished, with supplier delivery times lengthening sharply and staff unable to work amid factory closures,” IHS Markit economist Eliot Kerr said.



“Meanwhile, restricted movement of people and social distancing has acted to stifle demand, delivering a double-barrelled blow to the economy,” he added.

The INSEE official statistics agency estimated last week that the economy was operating at two-thirds of its normal level, which was likely to knock 3 percentage points off growth for each month the country spends in lockdown.


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Global Stocks Fall as Oil Dips Below $20


Today’s Stock Market News { Monday – 30 March – 2020 }


In Monday-afternoon trading in Hong Kong, S&P 500 futures rose about 1%, reversing earlier declines and suggesting that U.S. shares could rise at the start of the week. The yield on the 10-year U.S. Treasury note, a security that is seen as a haven, fell to 0.678%, according to Tradeweb, from 0.744% Friday. Yields move in the opposite direction of prices.




European equities wavered between small gains and losses, as gains for shares in chemical manufacturers and telecommunication firms offset losses for shares in banks and energy producers. The broad Stoxx Europe 600 index was down 0.1%.

Japan’s Nikkei 225, which logged its best week in its history last week, pulled back more than 1.5% as the yen strengthened slightly to 107.75 to the dollar. SoftBank Group, a major index constituent, pared some of its recent gains to fall more than 6% after a satellite venture it had backed, OneWeb Global, filed for bankruptcy.

Australia’s benchmark S&P/ASX 200 soared 7%, with gains intensifying late in the session after the government unveiled a 130 billion Australian dollars ($80.1 billion) wage-subsidy program.

Monetary authorities in the region also took further steps to shore up markets and economies. China’s central bank cut an interbank interest rate, while its counterpart in New Zealand said it would start buying corporate bonds to help companies stay afloat. Singapore, which uses foreign-exchange rates rather than borrowing costs as its main policy tool, also eased policy.

South Korea’s Kospi Composite added 0.2% while Hong Kong’s Hang Seng Index and the Shanghai Composite in mainland China fell less than 1%.

Monday’s moves followed a Friday pullback in U.S. stocks, which came after three days of solid gains. “We’ve had the rally, and now we might have a bit more of the reality,” said Sean Taylor, chief investment officer for Asia-Pacific at asset manager DWS.

The White House on Sunday extended its social-distancing guidelines for an additional 30 days, through the end of April. President Trump said the peak of the death rate from the new coronavirus was expected to hit in two weeks, predicting the U.S. would be on its way to recovery by June 1. Coronavirus cases world-wide have topped 718,000, with more than 33,000 deaths.

Mr. Taylor at DWS said the U.S. move to extend social distancing reflected how the focus of the pandemic had shifted from China to the U.S. and Europe, with public-health measures bringing economic activity to a near standstill and reducing global demand.

Brent crude, the global oil benchmark, pulled back more than 3.5% to $26.97 a barrel. West Texas Intermediate, the main U.S. crude gauge, fell below $20 a barrel at one point, before recovering slightly to stand 3.3% lower at $20.81 a barrel. WTI had hit an 18-year settling low of $20.37 earlier this month.

Crude prices have plunged on worries about reduced demand and a price war among major oil producers.

U.S. stocks last week posted their biggest weekly gain since 1938 after a roller-coaster ride, with the Dow surging 13% and the S&P 500 climbing 10%. But both indexes sold off on Friday and remain down more than 20% in 2020. Lawmakers in the U.S. agreed to the largest economic-relief package in U.S. history in response to the coronavirus pandemic.





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Economic Indicators: Consumer Sentiment in U.S. Slumps by Most Since October 2008

U.S. consumer sentiment plummeted in March by the most since October 2008 as mounting Covid-19 cases nationwide and business closures elevated concerns about the economy.

The University of Michigan’s final sentiment index for the month slumped 11.9 points to a three-year low of 89.1, data Friday showed. The median forecast in a Bloomberg survey of economists called for a decline to 90 after a preliminary March reading of 95.9.

Ratings for current conditions also decreased by the most since 2008, and a measure of the economic outlook dropped to the lowest level in more than three years. Stocks fell and Treasuries advanced as investors assessed the pandemic’s impact on the economy.





“The outlook for the national economy for the year ahead changed dramatically in March, with the majority now expecting bad times financially in the entire country,” Richard Curtin, director of the Michigan sentiment survey, said in a statement. “Perhaps the most important takeaway is that the largest proportion of consumers in nearly 10 years anticipated that the national unemployment rate will increase in the year ahead.”

The report provides one of the more-sobering pictures yet of how the widespread economic halt, amid efforts to help contain the virus, is impacting consumers’ attitudes. The March figures represent a drastic departure from just a month earlier, when a strong job market and cheap fuel contributed to the second-highest sentiment reading since 2004.

The university’s final survey for the month included responses through March 24, a stretch that includes significant upheaval and uncertainty in day-to-day living and the labor market, as well as in financial markets. A report yesterday showed initial claims for unemployment benefits soared to a record 3.28 million last week.

“Stabilizing confidence at its month’s end level will be difficult given surging unemployment and falling household incomes,” Curtin said. “Mitigating the negative impacts on health and finances may curb rising pessimism, but it will not produce optimism.”

April consumer sentiment data will reflect the surge in dismissals and growing Covid-19 cases, as well as progress on Capitol Hill toward a $2 trillion economic-relief package that includes direct payments to many Americans.



Most notably, the number of confirmed cases nationwide continues to rise. There are currently more than 85,000 with the disease in the U.S., the most in the world, compared with 62 people at the end of February.

The Michigan data showed an index of buying conditions for durable goods dropped in March to the lowest level since 2014.

Year-ahead financial prospects declined across all age and income subgroups, though modestly as respondents anticipated the negative effects from the pandemic would be short-lived.

The impact of the virus on consumer sentiment are likely to become more evident as monthly reports capture the tectonic shift in economic and market conditions seen over the last month. The Conference Board will publish its March confidence reading on Tuesday. Meanwhile, Bloomberg’s weekly index fell to a four-month low.





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3 Food Delivery Stocks Set To Gain As COVID-19 Lockdowns Boost Demand

As the coronavirus continues to spread rapidly around the globe, infections in the U.S. are on the rise with at least 55,231 confirmed cases and 801 deaths reported.

To contain the pandemic in the U.S., states are taking lockdown measures to reduce the number of social interactions. The majority of states have prohibited dining at restaurants, permitting only delivery and pick-up options.



While Wall Street is on track to suffer its worst month since the Great Depression, some food delivery stocks are thriving on expectations that even more Americans will order in as they are confined to their homes in the weeks ahead. These three stocks are well-positioned to benefit:

1. Domino’s Pizza
Domino’s Pizza (NYSE:DPZ) is known for its delivery service, which accounts for about 55% of total orders. As an increasing number of people are opting for take-out, the Ann Arbor, Michigan-based pizza chain has been displaying robust relative strength amid the ongoing coronavirus market correction. Shares of the corporation, which are up about 22% over the past month-and-a-half, settled at $343.56 last night, giving it a market cap of roughly $13.4 billion.

The multinational pizza chain with 17,000 stores in more than 90 countries around the world officially began implementing its ‘Contact Free Delivery’ service due to the COVID-19 outbreak this week in the U.S. as well as other countries impacted by the virus, like India, the United Kingdom, Ireland, and Australia.

The company announced last week that it expects to hire about 10,000 workers in the U.S. alone to meet increased orders at a time when the coronavirus pandemic has resulted in restaurants across the country laying off thousands of workers.

“Our corporate and franchise stores want to make sure they’re not only feeding people, but also providing opportunity to those looking for work at this time, especially those in the heavily-impacted restaurant industry,” CEO Ritch Allison said in a statement on March 19.

2. Blue Apron
Blue Apron (NYSE:APRN) is a New York-based online meal-kit company that delivers pre-measured ingredients, with which customers cook recipes of their choice. By making home cooking easy and accessible, Blue Apron has gained as the coronavirus outbreak in the U.S. led more Americans to seek alternatives to shuttered restaurants and emptied grocery store shelves.

Even after Tuesday’s 15% drop, this month the stock has surged an astonishing 260%, bucking the broader market rout brought on by virus fears. Shares ended at $10.36 last night, giving the food-delivery service a market cap of $137.45 million.

Blue Apron said last week it has seen a “sharp increase” in demand for its meal kits and it is taking steps to meet the greater number of orders. “We are increasing our capacity for future orders and expect to fulfill this increased demand by the next available weekly cycle, starting on March 30,” Linda Findley Kozlowski, Blue Apron’s chief executive, said on March 19.

However, any boost in business for Blue Apron will likely taper off after the immediate threat of the COVID-19 outbreak passes and consumers return to eating out. Prior to its recent surge, shares of Blue Apron had fallen about 98% from its 2018 IPO price, plunging to $2 in late February, due to growing competition and disappointing revenue.

3. Chewy
Chewy (NYSE:CHWY) is the leading online seller of branded and private-label pet food and grooming supplies in the U.S. The Florida-based company allows customers to browse a wide variety of foods for different animals through its website and mobile applications, then receive the package directly to their door.

Like the two other companies mentioned above, Chewy has also seen its shares rise despite the broader market selloff. The online pet products retailer has benefitted as its in-home delivery model mitigates the public health concern of consumers shopping for their pets at brick-and-mortar retailers.

Shares of the online pet products seller, which are up more than 27% over the past two weeks, closed at $33.65 yesterday, giving it a market cap of $12.8 billion. The stock touched a record high of $34.99 on March 19.

Chewy next reports earnings on Thursday, April 2, after markets close. Consensus calls for a loss of 15 cents per share for the fourth quarter, while revenue is forecast to total $1.35 billion.



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Financial Markets: European Shares Jump Again On Stimulus Bump

European shares rose on Wednesday following a strong rally in the previous session, as investors bet on unprecedented stimulus measures to ease the economic pain on businesses and households from the coronavirus pandemic.

The pan-European STOXX 600 index (STOXX) was up 2.1% at 0804 GMT, with energy (SXEP), industrials (SXNP), financials (SXFP) and miners (SXPP) leading gains for a second straight day.



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The benchmark index has now recovered its losses from mid March on the back of extraordinary fiscal and monetary stimulus from Europe and the United States. On Wednesday, U.S. officials agreed on a whopping $2 trillion stimulus package.

Still, the European bourse is down more than 25% from its record high last month in the biggest rout since the financial crisis, with another global recession looming in the face of a collapse in business activity in March.

German conglomerate Thyssenkrupp (DE:TKAG) rose 12.6% after saying it would cut 3,000 jobs at its steel unit by 2026, with no forced layoffs until March 31, 2026, as part of a wage deal struck with powerful labor union IG Metall.









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U.S. Futures And Global Equities Rise After Fed Move

U.S. stock-index futures and global equities rose after the Federal Reserve stepped up its assistance to the American economy, saying it would back lending to businesses and buy essentially unlimited amounts of government debt.

S&P 500 futures gained more than 3% in early afternoon trading on Tuesday in Hong Kong, suggesting U.S. shares could rise later in the day.



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Japan’s Nikkei 225 closed 7.1% higher, while South Korea’s Kospi rose more than 8%. A second day of sharp gains for SoftBank Group Corp. on a $41 billion asset-sale plan helped buoy the Nikkei. Benchmarks in Hong Kong, Australia, Shanghai, India and New Zealand also advanced.

On Monday, the Dow Jones Industrial Average fell about 3% after U.S. lawmakers failed for a second day to pass a rescue package to ease the blow from the coronavirus pandemic. U.S. stocks, however, pared earlier losses and investors took some solace from the Fed’s measures.

Sherwood Zhang, a portfolio manager at Matthews Asia, welcomed the Fed action. “Hopefully, the Fed’s latest move should be able to help tighten credit spreads globally, easing pressure on the cost of borrowing for corporations,” he said, adding that U.S. political gridlock mattered less internationally.

Mr. Zhang said he had used the recent market selloff to increase his holdings of high-quality stocks, including some consumer companies with long-term growth potential whose shares have been battered recently.

David Gaud, Asia chief investment officer and head of discretionary portfolio management at Pictet Wealth Management, said moves by the Fed and other central banks to keep interest rates low and ensure money was available for corporations were essential to prevent a complete economic meltdown.

“It’s moving in the right direction but it’s not sufficient,” to support world economies without decisive government action to address the economic fallout as well, he said. He said the longer the pandemic lasts, the greater its economic impact would be, in which case current fiscal and monetary policy responses might prove insufficient.

The global death toll from the novel coronavirus surpassed 16,000, with more than 367,000 confirmed cases. Cases in the U.S. alone grew 10-fold to cross 41,000 from a week earlier, as more state governors ordered residents to stay home. Meanwhile, the U.K. joined other European countries in lockdown under a raft of restrictions from the government.





The WSJ Dollar Index, which tracks the dollar against a basket of 16 currencies, eased 0.6% Tuesday to 96.42. On Monday, the index hit its highest closing level since 2002. The gauge was created in 2012 but back-calculated to 2001. Regional currencies including the Australian dollar, Korean won and Chinese yuan strengthened against the dollar.

The 10-year U.S. Treasury note, which is seen as a haven, declined in price. The yield on the note, which moves in the opposite direction of its price, rose about 0.045 percentage point to 0.812%, according to Tradeweb.

Brent crude, the global oil benchmark, rose 4.1% to $30.49 a barrel. Crude prices have plunged on worries about reduced demand and a price war between major oil producers.


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Goldman: U.S. Measures Could Support Oil Prices Near Term

Supply restraint by core-OPEC producers could push second-quarter Brent oil prices up to $30 a barrel, while U.S. measures to support the market could underpin prices in the near term, Goldman Sachs (NYSE:GS) said in a research note.

Citing Wall Street Journal reports that the United States was considering intervening in the ongoing Saudi-Russian price war and Texas regulators may curb oil output, the U.S. investment bank said such action would reduce global and U.S. domestic supplies.



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U.S. crude oil prices rose more than $1 on Friday, extending steep gains from the previous session, after U.S. President Donald Trump said he would “get involved” in the price war at an “appropriate time”.

While any U.S. measures could support the oil market into the second half of the year, however, Goldman Sachs said accompanying supply cuts would still not be enough to offset the 8 million barrels per day (bpd) demand loss – brought about by countries slowing economic activity to halt the spread of the coronavirus which has caused nearly 10,000 deaths worldwide.

“Medium-term, the impact of such policies will depend on their political viability given the upcoming presidential election,” Goldman Sachs said in the note issued on Thursday.

U.S. production quotas could create a $5 to $10 upside to Goldman Sachs’ West Texas Intermediate price forecast of $40 to $45 a barrel in 2021, the bank said.

While a return to U.S. oil supply management policies of the 1970s and 80s would “help support prices in the third and fourth quarter above our $30 and $40 a barrel Brent forecast, they would simply replace OPEC’s artificial price support policy with another,” the bank said, referring to the Organization of the Petroleum Exporting Countries, of which Saudi Arabia is a key member.



Oil extends recovery as Trump hints at intervening in Saudi-Russia price war

Oil prices recovered further on Friday, following steep gains in the previous session after U.S. President Donald Trump hinted he may intervene in the price war between Saudi Arabia and Russia at an “appropriate time”.

Prices were also supported by United States’ plans to buy up to 30 million barrels of crude oil for its emergency stockpile by the end of June, while regulators in the country’s largest oil-producing state Texas were reportedly considering curtailing production.

The more active West Texas Intermediate (WTI) crude futures contract for May was up 43 cents, or 1.7% at $26.34 a barrel by 0540 GMT. The contract rose as much as 5.5% to $27.34 per barrel earlier in the session.

U.S. crude futures for April (CLc1) also rose 43 cents to $25.65 a barrel. The front-month April contract, which spiked 24% on Thursday, expires later on Friday.

“An astonishing rebound in crude oil prices overnight was primarily driven by U.S’s consideration to intervene in the oil market by increasing strategic reserves, while slashing some oil production,” said Margaret Yang, market analyst at CMC Markets.

“The underlying issue is that global energy demand is falling sharply as more countries join the ‘lockdown’ club. The severity of Covid-19 for the macro-economy could exceed anyone’s expectation, and it could last for a long period of time.”

Brent crude futures (LCOc1) climbed 28 cents, or about 1%, to $28.75 per barrel.

The international benchmark rose 14.4% on Thursday in its biggest one-day gain since September, but was on track for its fourth consecutive weekly drop on Friday.

U.S. crude and Brent have both collapsed about 40% in the last two weeks since talks between the Organization of the Petroleum Exporting Countries and its allies, including Russia, broke down, which led Saudi Arabia to ramp up supply.

The Trump administration is considering a diplomatic push to get Saudi Arabia to close its taps and using the threat of sanctions on Russia to force them to reduce output, the Wall Street Journal reported, quoting unidentified sources.


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“The outsized gains by WTI reflect the hope and not the reality of the U.S. shale industry. Russia and Saudi Arabia have zero interest in helping US shale survive. Just the opposite, in fact,” said Jeffrey Halley, senior market analyst at OANDA.

“Once this reality finally sets in, I expect the rally in oil to disappear as quickly as it began.”





Stock Market Today: Technology Sector Leads A Turnaround

Stocks turned higher Thursday, erasing losses from earlier in the day as sharp gains in tech shares led to a turnaround. The Dow was up more than 400 points, or 2.1%. The S&P 500 was up 1.5%, while the Nasdaq outperformed with a 3.2% surge. Shares of Netflix and Facebook rose 7.6% and 5.8%, respectively. Amazon gained 4.1%.

Earlier in the session, the Dow was down 721 points, or more than 3%. The S&P 500 briefly fell more than 3% as well.

“This is a day trader’s market,” said Christian Fromhertz, CEO of Tribeca Trade Group. “That’s not my favorite type of trading, but the day-to-day swings and the overnight moves are pretty insane.”

Among the industries trading in positive territory Thursday morning was energy, with the S&P sector up more than 0.5%. Big oil producers like Diamondback Energy and Apache rose more than 8% each as futures contracts tied to the price of West Texas Intermediate crude rallied more than 15% to $23.47, on pace for its fourth-best day ever.







The moves followed yet another violent day on Wall Street on Wednesday. The Dow dropped 1,338.46 points, or 6.3%, on Wednesday and clinched its first close below 20,000 since February 2017. The Dow was down more than 2,300 points at the lows of the session. The S&P 500 dropped 5.2% to 2,398.10 and closed nearly 30% below a record set last month as both indexes sank further into bear markets.

Markets are clearly in a state of panic and forced liquidations – but risks remain skewed to the upside and this should become much more apparent once some of the solvency issues are addressed,” Adam Crisafulli, founder of Vital Knowledge, said in a note.

Wall Street has been on an unprecedented roller-coaster ride amid the coronavirus turmoil, with the S&P 500 swinging 4% or more in either direction for eight consecutive sessions.

An eye-watering spike in Treasury yields has also kept investors anxious. The 10-year Treasury rate hovered at 1.1% after jumping more than 50 basis points in two sessions as it rebounded from record lows.

Gregory Faranello, head of U.S. rates trading at AmeriVet Securities said swift reversal in yields comes amid strong dollar demand amid the coronavirus crisis.

“There’s a dollar strain on the system, globally,” said Faranello. “Whether it’s Asia, Brazil, emerging markets, Europe or here in the U.S., the dollar is in demand right now.”

“If you look at everything across the board, it’s all going down together. The one thing that’s going up that’s dollar denominated is the U.S. dollar,” he added.

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The dollar index, which tracks the greenback’s performance against a basket of other currencies, jumped to its highest level since January 2017 on Thursday. It last traded up 0.7% at 101.83 after breaking above 102.

More central bank stimulus

On Wednesday evening, the European Central Bank (ECB) announced a new Pandemic Emergency Purchase Program that will deploy €750 billion ($819 billion) to purchase securities to help support the European economy. The central bank said purchases will be conducted until the end of 2020 and include a variety of assets including government debt.

The ECB’s action follows similar initiatives by the Federal Reserve, its U.S. counterpart. The Fed announced earlier this month plans to pump an additional $1 trillion into the U.S. economy through asset purchases and cut the federal funds rate to zero. The Fed also said Wednesday night it will create a backstop for prime money market funds.

Those announcements came as the number of confirmed coronavirus cases around the world topped 200,000, according to Johns Hopkins University. In the U.S. alone, more than 9,400 cases have been confirmed along with over 100 deaths.







U.S. lawmakers appeared to inch closer to implementing fiscal stimulus measures. The Senate had enough votes to pass a bill expanding paid leave and unemployment benefits in response to the virus as part of what’s expected to be a whopping governmental response to avoid a downturn.

Senate Majority Leader Mitch McConnell said Wednesday he would vote for the plan despite what he called “real shortcomings.” With the urgent need to take action, “I do not believe we should let perfection be the enemy of something that will help even a subset of workers,” he said.






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World Leaders Rush In To Shore Up Panic-Hit Global Financial System

World leaders raced to shore up panic-stricken global markets on Thursday, pouring liquidity into the financial system as investors everywhere dumped assets, switching to dollars in cash amid the escalating coronavirus pandemic.

Policymakers in the United States, Europe and Asia resorted to emergency action as the pandemic left their economies virtually comatose, with quarantined consumers, broken supply chains, paralyzed transportation and depleted shops.

There were almost 219,000 cases of coronavirus reported globally, including over 8,900 deaths linked to the virus. Over 20,000 of those cases were reported in the past 24 hours, a new daily record.



The European Central Bank launched new bond purchases worth 750 billion euros ($817 billion) at an emergency meeting late on Wednesday, in a bid to prevent a deep recession that threatened to outdo the 2008-09 global financial crisis.

“Extraordinary times require extraordinary action,” ECB President Christine Lagarde said, amid concerns that the strains from burgeoning crisis could eventually tear apart the euro zone as a single currency bloc.

In the United States, the Federal Reserve rolled out its third emergency credit program in two days, aimed at keeping the $3.8 trillion money market mutual fund industry functioning if investors made rapid withdrawals.

On Sunday, the Fed slashed interest rates to near zero and pledged hundreds of billions of dollars in asset purchases, while President Donald Trump’s administration drew up a $1 trillion stimulus and rescue proposal.

The desperate state of industry was writ large in Detroit, where the big three automakers – Ford Motor Co (N:F), General Motors Co (N:GM) and Fiat Chrysler Automobiles NV (MI:FCHA) (N:FCAU) – confirmed they would be shutting U.S. plants, as well as factories in Canada and Mexico.

The British pound plunged to its lowest level against the dollar since 1985, as Bank of England Governor Andrew Bailey said he would not rule anything out when asked about printing money to give to individuals. Britain ordered all schools to close from Friday as the number of confirmed coronavirus cases rose 48% on Wednesday. Australia made a historic foray into quantitative easing after an out-of-schedule meeting on Thursday and cut interest rates for the second time in a month.


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South Korea warned of a global credit crunch and said it was setting up crisis funds to stabilize its financial markets.

Central banks in emerging countries from Brazil to India have stepped in this week to buy government bonds to prevent a jump in borrowing costs that would put more pressure on their economies.

Despite those moves, which together with other liquidity injections and stimulus announced in recent weeks reached levels unseen since World War Two, nearly every stock market in Asia was in the red, with Seoul, Jakarta and Manila hitting daily loss limits that trigger the suspension of trade.

At one point the Philippines bourse was down 24%. In currency markets, everything except the dollar and the euro collapsed.

J.P. Morgan economists forecast the U.S. economy to shrink 14% in the next quarter, and the Chinese economy to drop more than 40% in the current one, one of the most dire calls yet on the potential scale of the fallout.

“We’re in this phase where investors are just looking to liquidate,” said Prashant Newnaha, senior interest rate strategist at TD Securities in Singapore.

WAR OF WORDS

It was not just the dire state of the economy that panicked investors. Tensions between the world’s two biggest superpowers reached some of their most elevated levels and other powers were locking heads over their reactions to the outbreak.

U.S. President Donald Trump on Wednesday ratcheted up his rhetoric against China over the coronavirus, saying Beijing should have acted faster to warn the world and dismissing criticism that his labeling it the “Chinese virus” was racist.

Trump’s tougher language marked an escalation in a bitter war of words between the world’s top two economies that has widened to include the global pandemic and media freedoms.

A European Union document seen by Reuters said Russian media have deployed a “significant disinformation campaign” against the West to worsen the impact of the coronavirus, generate panic and sow distrust.

U.S. infections were closing in on 8,000, with the death toll climbing to at least 151. Millions of Americans were staying at home.

In contrast, China, which has been the first country to lock down large swathes of its territory, was slowly coming back to life. Chinese scientists and health experts involved in the fight against the virus believed the worst was over, downplaying warnings that the disease could become seasonal or that a deadlier “second wave” could hit later in the year.



They were wary, however, of new cases from overseas.

New local transmissions in China fell to zero, while imported cases surged by a record, accounting for all 34 new cases on Wednesday.

Germany, Iran and Spain reported over 12,000 cases each, while 12 other countries confirmed between 1,000-10,000 cases each. The virus has reached 172 countries and territories.

Governments around the globe, from the United States and Britain to the emerging world have been criticized for acting too slowly to stop the spread.

In Brazil, where President Jair Bolsonaro initially labeled the virus “a fantasy”, more members of the country’s political elite fell ill. On Wednesday night, housebound protesters banged pots and pans, shouting “Bolsonaro out!” from their windows.





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New York Stock Exchange Move To Electronic Trading Because Of Coronavirus

The New York Stock Exchange said Wednesday it will temporarily close its historic trading floor and move fully to electronic trading after two people tested positive for coronavirus infection at screenings it had set up this week.



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All-electronic trading will begin on March 23 at the open, the exchange said. The facilities to be closed are the NYSE equities trading floor and NYSE American Options trading floor in New York, and NYSE Arca Options trading floor in San Francisco.

The closure was in part as a result of positive coronavirus tests of two people, Stacey Cunningham, President of the NYSE, told CNBC. The entrants were stopped at the medical screenings at the Big Board.

The stock market has closed at times over the years, such as during World War II and in the wake of 9/11, but this is the first time the physical trading floor of the Big Board has ever shut independently while electronic trading continues.

“We implemented a number a number of safety precautions over the past couple of weeks, and starting on Monday this week we started pre-emptive testing of employees and screening of anyone who came into the building,” Cunningham said on “Closing Bell.” “If that screening warranted additional testing, we tested people and they were sent home and not given access to the building. A couple of those test cases have come back positive.”

“While those people were not in the building this week and the building had been cleaned and addressed prior to start of trading on Monday, I think it’s reflective we’re seeing things evolve,” Cunningham added.

The NYSE is operated by the electronic trading group Intercontinental Exchange, which acquired it in 2012. The exchange moved into its location at 18 Broad St. in lower Manhattan in 1903.



Wall Street has been on an unprecedented volatile ride during the coronavirus crisis. Just this week, a market-wide circuit breaker was triggered twice by the NYSE due to the massive sell-off, resulting in brief trading halts.

On Wednesday, the Dow Jones Industrial Average closed below 20,000 for the first time since February 2017. The S&P 500 was now nearly 30% below a record set last month.

The exchange said in a release that it was implementing its business continuity plan and “trading and regulatory oversight of all NYSE-listed securities will continue without interruption.”





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Financial Markets Tumbles Again On Recession Fears

Trading in U.S. stock was again suspended almost immediately after the opening on Wednesday, after another huge wave of selling driven by fears of a coronavirus-induced recession.

By 10 AM ET (1400 GMT), the Dow Jones Industrial Average was down 980 points, or 4.6% at 20,257 points, having tried and failed to break through the 20,000 psychological support level at the opening. The S&P 500 was down 3.7% and the Nasdaq Composite was down 2.9%.

The indices had risen by between 5.2% and 6.2% on Tuesday in response to outlines of a $1.2 trillion package of government stimulus measures.

Analysts at Deutsche Bank (DE:DBKGn) said Wednesday they still expected the U.S. economy to contract by annualized 12.9% in the second quarter as the pandemic hits its expected peak.

Newswires reported New York City Mayor Bill de Blasio as calling for military assistance, saying that the number of confirmed cases in the city would top 1,000 by the end of the day. It had stood at 923 on Tuesday.

Globally, the number of confirmed cases has now topped 204,000, with some 6,500 of those in the U.S., according to Johns Hopkins data. The number of deaths globally has risen to 8,241, with the virus still accelerating in the U.S. and much of Europe.

Among individual stocks, Boeing (NYSE:BA) was among the biggest losers, falling 16.4% after the company said it would ask the government for up to $60 billion in support for the aerospace sector.

Boeing has spent $43 billion on share buybacks since 2013, a figure that may put pressure on the government to dilute current shareholders heavily as part of any taxpayer-funded bailout.

Crude oil was also sharply lower as traders priced in an increasingly severe hit to demand for fuel due to lockdown measures. U.S. crude futures fell 9.7% to $24.77 a barrel, their lowest since 2002.



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Traders Bet On Falling ‘Fear Gauge’

The volatility gauge tends to rise when markets fall and investors reach for stock protection through the options market. The VIX climbed to 82.69 Monday, topping its high of about 80 in 2008. After the financial crisis, trading derivatives tied to the VIX took off as people sought to profit from its swings.



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Many are wagering its recent jump won’t be long-lived. Betting on its fall through what is known as the short volatility trade has been particularly popular in recent years. This can be a risky tactic that backfires when stocks slide as sharply as they have in recent weeks as the spread of coronavirus has raised the risk of a recession.

As stock markets staged a modest rebound Tuesday, some of the most popular contracts were tied to VIX falling to 27 or 20, Trade Alert data show, closer to levels hit earlier this year when major indexes hit records.

Still, turbulence in markets has been high, triggering diverging views on the gauge’s path. Analysts at Credit Suisse Group AG said another steep selloff similar to Monday’s could push the VIX above 100. The S&P 500 fell 12% that day, one of the worst sessions in its history.

Some options traders have already been positioning for that, scooping up contracts tied to the VIX jumping as high as 100 or even 130, Trade Alert data show. Those are among the smaller positions outstanding but were some of Monday’s most popular trades, according to Trade Alert.

“While this is surely possible, we believe it is highly improbable,” wrote Jonathan Golub, an analyst at Credit Suisse.

Cboe Global Markets Inc., the exchange operator that oversees VIX options trading has added new strike prices—or levels at which options can be exercised—during the recent market tumult. Cboe added options with a strike of 100 on March 2 and more strikes were added the following week, a spokeswoman for the exchange said.






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Stock Market Today: Wall Street Attempts Rebound From The Dow’s Third-Worst Day Ever

Stock futures and premarket trading in exchange-traded funds pointed to a bounce on Tuesday following the Dow Jones Industrial average’s third-worst day ever.

Trading overnight, however, was very volatile with futures giving back more than 1,000 points as investors try to weigh the uncertain economic impact of the coronavirus outbreak.

Around 6:14 a.m. ET, Dow Jones Industrial Average futures indicated an implied open of more than 400 points. The S&P 500 SPDR ETF gained more than 2% in premarket trading.

Earlier in the session, futures contracts tied to the S&P 500, Dow Jones Industrial Average and Nasdaq 100 hit their upside limit, triggering a halt. In non-U.S. trading hours, stock futures are halted if they hit their downside or upside limits, pinning those contracts to their upper or lower bounds. The halt is meant to ensure that opening trade is orderly and not emotional.




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Those moves came after President Donald Trump tweeted: “The United States will be powerfully supporting those industries, like Airlines and others, that are particularly affected by the Chinese Virus. We will be stronger than ever before!”

The Dow Jones Industrial Average and S&P 500 had their worst day since the “ Black Monday” crash of 1987 , falling 12.9% and 12%, respectively. It was also the Dow’s third-worst day ever. The Nasdaq Composite had its biggest one-day plunge ever, tumbling 12.3%.

Trading halts typically occur amid extremely abnormal market volatility.

The Cboe Volatility Index — Wall Street’s preferred fear gauge — posted its highest-ever close at 82.69 . That tops the financial crisis’ peak of 80.74.

Wall Street’s drop came even after the Federal Reserve slashed interest rates to near-zero on Sunday and announced a $750 billion asset-purchasing program. It also came as the number of coronavirus cases jumped in the U.S.

At least 4,281 cases have been confirmed in the U.S. along with more than 70 deaths, according to data from Johns Hopkins University. President Donald Trump also said the crisis could stretch into August, adding the administration may look at locking down “certain areas.”

“Although the contemporary crisis is loaded with bad news, this has not been its primary problem. It’s the ‘unknown,’” said Jim Paulsen, chief investment strategist at The Leuthold Group, in a note. “Not even health experts understand what this is or where it is headed, and that is the worst possible outcome for investors.”

“Give me bad news any day over complete uncertainty,” he said.

The S&P 500 closed Monday at its lowest level since December 2018. The Dow ended the session at its levels not seen since early 2017.

“For now until there is improvement in the trend … it’s tough to consider being long and it’s right to be in Cash on the sidelines,” Mark Newton, managing member at Newton Advisors, said in a note to clients.



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Wall Street Sees Worst Drop Since 1987

U.S. stock markets fell the most since 1987 in early trading on Monday, having been suspended, limit down, almost immediately after trading started, as the shutdown of increasing swathes of public life in the U.S. brought home the scale of the coronavirus outbreak.

By 9:50 AM ET (1350 GMT), the Dow Jones Industrial Average was down 2,773 points or 12% at 20,393 points. The S&P 500 was indicated down 10.7% and the Nasdaq Composite was down 11.5%.





Investors weren’t reassured by the emergency measures taken on Sunday night by the Federal Reserve, which cut the target range for fed funds to near zero and signalled $700 billion in asset purchases to keep financial markets orderly.

The Fed also said it would extend the availability of dollars internationally through swap facilities with other central banks.

“The Fed has pulled out all the stops. But in the end the underlying driver of this crisis is very different from 2008/9, i.e. this is about COVID-19,” said Robin Brooks, an economist with the Institute for International Finance in Washington, DC. “That means the Fed can alleviate the symptoms, but it’s unreasonable to expect the crisis to go away on Fed action.”

Earlier on Sunday, Treasury Secretary Steven Mnuchin urged investors to look beyond the short-term hit to the economy, telling CNBC that “There will be a huge amount of pent up demand when this is done. And it will be done.”

However, Mnuchin also warned that “the goal is not to bail out companies,” a line that appeared to raise the risk of near-term bankruptcies, especially in the transport and oil sectors.

Among the worst hit were airline stocks. United Airlines stock fell over 15% after saying it would slash capacity by 50%, while Delta Air Lines (NYSE:DAL) stock and American Airlines (NASDAQ:AAL) stock also fell heavily after the Trump administration expanded restrictions on arrivals from Europe to include the key routes serving London and Dublin.

Apple (NASDAQ:AAPL) stock fell as much as 13% before rebounding to be down only 9.7% after the company said it will shut all its stores outside China. It was also hit by a $1.2 billion antitrust fine in France.

Oil and gas stocks tumbled again as crude prices fell below $30 a barrel and U.S. gasoline prices fell to an all-time low of 69 cents a gallon.

Banks were also badly hit, as the Fed’s action threatened to crush lending margins without, at least in the short term, supporting income from currency and securities markets. Bank of America (NYSE:BAC) stock fell 14.6%, while JPMorgan (NYSE:JPM) stock fell 15.1% and Citigroup (NYSE:C) stock fell 19.7%.


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Casino operators MGM Resorts (NYSE:MGM) and Wynn Resorts (NASDAQ:WYNN) also both fell after the pair announced they would temporarily close their casinos in Las Vegas, essentially putting much of the famous strip under lockdown.



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Markets News: U.S. Travel Ban Stoked Renewed Worries About The Coronavirus’s Economic Toll


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S&P 500 futures were down 4%, suggesting U.S. shares could be set for another punishing session later Thursday, a day after the Dow Jones Industrial Average slid into a bear market. European indexes fell at the start of trading Thursday, with the pan-continental Stoxx Europe 600 shedding 5.4% and Italy’s FTSE MIB falling 5.8%.

Benchmarks in Australia, Hong Kong, India, Japan and South Korea fell to multiyear lows, crude-oil prices dropped and U.S. government bonds rallied.

On Wednesday night, President Trump issued a 30-day ban on most travel from Europe to the U.S., a new serious disruption to everyday activity. Mr. Trump said he would offer financial assistance to those affected by the coronavirus and that the pandemic isn’t a financial crisis.

Daryl Liew, head of portfolio management at REYL Singapore, said markets were reacting negatively to “drastic containment strategies,” such as those introduced by the U.S. and Italy, which are likely to hurt economic activity and business operations.

Italy has ordered all restaurants and bars, and most stores, to close as it races to contain the worst coronavirus outbreak outside China.

Investors were disappointed Mr. Trump didn’t clearly articulate details of how he planned to roll out an economic stimulus package, said Takeo Kamai, head of execution services at CLSA Securities Japan Co. in Tokyo.

U.S. 10-year Treasury yields fell to 0.747%, according to Tradeweb. Bond yields fall when prices rise. Brent crude, the global oil benchmark, fell nearly 5% to $34.01 a barrel.

In Tokyo, Japan’s Nikkei 225 plunged 4.4%, joining the Dow and numerous international counterparts in a bear market—a measurement defined as a retreat of more than 20% from a recent peak.

Australia’s benchmark S&P/ASX 200, whose performance is heavily influenced by financial and natural-resources stocks, fell 7.4% to its lowest in more than three years.

Banks were notable losers across the region. For lenders, tough economic times can mean less new business, more bad loans, and thinner margins on lending because both short- and long-term interest rates are low. Japan’s Mitsubishi UFJ Financial Group fell 5.3%, while Commonwealth Bank of Australia dropped 7.9%.

The outlook for the world economy is dimming rapidly due to the pandemic. This week IHS Markit slashed its forecast for global growth this year by 0.8 percentage point to 1.7%, saying it expects zero growth in the eurozone, a contraction in Japan and expansion of just 4.3% in China this year.

On Monday, U.S. stocks suffered their biggest drop since the 2008 global financial crisis. They rebounded a day later, and then sold off again steeply on Wednesday, with declines intensifying after the World Health Organization declared the coronavirus crisis a pandemic.

Paul Sandhu, the Asia-Pacific head of multiasset quant solutions and client advisory for BNP Paribas Asset Management in Hong Kong, said markets would remain volatile. “The fear coming off from the coronavirus is going to be something that continues over the next few weeks at least,” he said.


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By midafternoon Thursday in Hong Kong, the Hang Seng Index dropped more than 3%. Stocks in mainland China, which have proved resilient recently, dropped modestly, with the Shanghai Composite retreating 1.7%.

Elsewhere in the region, Thailand’s SET Index plummeted more than 8% to the lowest since 2012. “Thailand’s economy is vulnerable to the pandemic because it is heavily reliant on tourism,” said Joanne Goh, investment strategist at DBS Bank in Singapore.





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Stock-Market-Corrections-2020


Virus Fears Push Stocks Closer To A Bear Market

The Dow Jones Industrial Average suffered its worst decline since 2008 and at one point came within 65 points of touching a bear market.

For the day, the Dow sank 2,013.76 points, or 7.8%, to 23851.02. It was the first time the Dow lost more than 2,000 points in a session. The S&P 500 fell 225.81 points, or 7.6%, to 2746.56, also its worst day since 2008. And the Nasdaq Composite slid 624.94 points, or 7.3%, to 7950.68.


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All 11 sectors in the S&P 500 were down, led by energy, which slid 20%. Financials were down 11%. Industrials and materials both fell 9.2%.

By day’s end, the Dow, S&P and Nasdaq were all down roughly 19% from record highs set earlier this year. A drop of 20% from those highs would halt a bull-market run that began after the financial crisis. Stocks bottomed out 11 years ago, on March 9, 2009.

The 11-year bull market is over,“ said Peter Cecchini, the chief market strategist at Cantor Fitzgerald, noting that it isn’t just about an official 20% drop.

Mr. Cecchini said central banks suppressed interest rates over the years, and that became a big narrative investors used to justify buying stocks. Meanwhile, signs have emerged that global growth was slowing, like the inverted yield curve late year, but were ignored, he said.

“That underlying backdrop of fragility is one of the reasons why this has unwound so quickly,” he said. “When a bubble extends this far, it doesn’t take much to prick it.”

Saudi Arabia’s decision over the weekend to instigate a price war as it escalates a clash with Russia sent oil prices down by the most since the Gulf War in January 1991. Crude prices, along with U.S. government bond yields, are typically viewed as key barometers of economic health and confidence, said Gregory Perdon, co-chief investment officer at private bankers Arbuthnot Latham.


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“There has always been an assumption that when the oil price collapses the world is going to become a darker place, whether that is driven by the demand side or supply side,” Mr. Perdon said. The latest tensions put the oil market in somewhat uncharted territory with pressure in terms of both supply and demand as the coronavirus epidemic threatens to sap businesses’ appetite for energy.

The plunge in crude added to two weeks of turmoil in equity and credit markets as investors have grown increasingly concerned about economic growth stalling. It also raised fresh concerns about the risks tied to heavily indebted energy companies in the high-yield market, and the fallout for other companies if broader credit markets tighten.

U.S. government bonds, which have already rallied to unprecedented highs, extended gains. The yield on the 10-year Treasury, which moves inversely to bond prices, dropped to 0.577%. The 30-year yield fell below 1%, and more recently was at 1.003%.

“The fear today is about a global recession,” said Thomas Hayes, chairman of Great Hill Capital, a hedge fund-management firm based in New York. “If Russia does not come back to the table soon, investors worry the default risk and credit spreads widening will lead to tighter credit and even a recession.”



Public-health authorities are escalating efforts to contain the coronavirus outbreak, leading to a drop in business activity and curtailing global trade. The number of confirmed coronavirus cases has exceeded 110,000, with over 3,800 fatalities globally. At least eight American states including New York have declared states of emergency as infections spread to new parts of the U.S., and Italy quarantined some 17 million people.

Brent crude, the global gauge of oil prices, shed 18% to $37.19 a barrel, while U.S. crude futures dropped 17% to $34.37 a barrel.

U.S. energy producers were among the hardest hit. Chevron dropped 13% and Exxon Mobil fell 8.3%. Occidental Petroleum slid 33%.

Rising defaults among U.S. energy producers may make it harder for companies in other sectors to access credit markets, analysts said. “That ultimately is the negative aspect to lower oil,” said Viktor Hjort, head of credit strategy at BNP Paribas. “There is a real risk, and that is tighter credit conditions.”

The price war between major oil producers is “throwing petrol on the fire” at a time when investors are struggling to understand how deeply the outbreak will impact global supply chains and consumer spending, according to Lyn Graham-Taylor, a rates strategist at Rabobank.


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“We have got a massive demand decline brought about by the virus and now you’ve got headline inflation going through the floor: all combinations that say we need to do more easing,” Mr. Graham-Taylor said.

Stocks in the European energy sector led markets lower in the region, with BP plummeting 18% in London. Anglo-Dutch firm Royal Dutch Shell, Norway’s Equinor, Italy’s Eni, the U.K.’s BHP Group and France’s Total were also among the big decliners. That led the pan-continental Stoxx Europe 600 index down 6.3% with key equity benchmarks in the U.K. and France entering bear-market territory.

Foreign-exchange markets also faced renewed volatility on Monday, as steep drops in oil sparked a flight from commodity-linked currencies. The Russian ruble lost 7.2%, while the Norwegian Krone dropped 2.5%.

In the Asia-Pacific region, the S&P/ASX 200 index in Australia dropped 7.3%, suffering its worst day since October 2008, during the depths of the global financial crisis. That puts the gauge close to bear-market territory, which is typically defined as a peak-to-trough decline of more than 20%. Japan’s Nikkei 225 index closed down 5.1%, its biggest daily drop since 2016, while the benchmark stock index in Shanghai dropped more than 3%.

The Japanese yen, which often rallies in times of market stress, surged 2.8% to trade below 103 to the dollar, at its strongest levels since 2016. Gold, which is also normally considered a haven asset during times of turmoil, slipped 0.3%.


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“We are in uncharted territory now,” according to Hubert de Barochez, markets economist at Capital Economics. “Up until last week, what we were seeing was bond yields lower, stocks hurt and riskier currencies getting hit, but the idea was that if good news were to come all these moves would revert.”

The question now is where markets—and especially interest rates—go from here, said Dan Alpert, an investment banker and managing partner of advisory firm Westwood Capital.

“I cannot believe, that now that confidence in the market has been destroyed, that interest rates remain at 0.4%,” he said, referring to the rate on the 10-year yield. What’s more likely, he said, is a period of disinflation, or even outright deflation, that would ripple across markets and economies.

That will hurt companies, he said, especially those that are suffering in the current selloff. Firms will be talking about conserving resources, which could affect factors ranging from buybacks to wages, he said. That would cut into employment and consumer demand, he said.

“This is going to change the entire inflationary outlook,” he said.


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China January-February Exports Tumble




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China’s exports contracted sharply in the first two months of the year, and imports slowed, as the health crisis triggered by the coronavirus outbreak caused massive disruptions to business operations, global supply chains and economic activity.

The gloomy trade report is likely to reinforce fears that China’s economic growth halved in the first quarter to the weakest since 1990 as the epidemic and strict government containment measures crippled factory production and led to a sharp slump in demand.

Overseas shipments fell 17.2% in January-February from the same period a year earlier, customs data showed on Saturday, marking the steepest fall since February 2019.

That compared with a 14% drop tipped by a Reuters poll of analysts and a 7.9% gain in December.

Imports sank 4% from a year earlier, but were better than market expectations of a 15% drop. They had jumped 16.5% in December, buoyed in part by a preliminary Sino-U.S. trade deal.

China ran a trade deficit of $7.09 billion for the period, reversing an expected $24.6 billion surplus in the poll.

Factory activity contracted at the fastest pace ever in February, even worse than during the global financial crisis, an official manufacturing gauge showed last weekend, with a sharp slump in new orders. A private survey highlighted similarly dire conditions.

The epidemic has killed over 3,000 and infected more than 80,000 in China. Though the number of new infections in China is falling, and local governments are slowly relaxing emergency measures, analysts say many businesses are taking longer to reopen than expected, and may not return to normal production till April.

Those delays threaten an even longer and costlier spillover into the economies of China’s major trading partners, many of which rely heavily on Chinese-made parts and components.

China’s trade surplus with the United States for the first two months of the year stood at $25.37 billion, Reuters calculation based on Chinese customs data showed, much narrower than a surplus of $42.16 billion in the same period last year.

Soybean imports in the first two months of 2020 rose by 14.2% year-on-year as cargoes from the U.S. booked during a trade truce at the end of 2019 cleared customs.

After months of tensions and tariff hikes that dragged on bilateral trade, the world’s two biggest economies agreed an interim trade deal in January that cut some U.S. tariffs on Chinese goods in exchange for Chinese pledges to massively increase purchases of U.S. goods and services.

The U.S. expects China to honor these commitments despite the coronavirus outbreak, a senior U.S. official said in February.

VIRUS THREATENS GLOBAL RECESSION

The supply and demand shocks in China are likely to reverberate through global supply chains for months, and the rising number of virus cases and business disruptions in other countries is raising fears of a prolonged global slowdown or even recession.

In response, global policymakers have stepped up efforts to cushion the economic blow of the epidemic, with the U.S. Federal Reserve delivering an emergency rate cut last week.

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Shortages of vital parts and components from China last month cost other countries and their industries $50 billion, a United Nations agency said on Wednesday.

The virus outbreak escalated in late January just as many businesses were winding down operations or closing for the long Lunar New Year holidays, and as hundreds of millions of Chinese were returning to their hometowns.

China customs said last month it would not release separate figures for January and would combine January and February instead, in line with how some of the country’s other major indicators are released early in the year, which is intended to smooth distortions created by the holidays.

Tough public measures such as restrictions on travel and quarantines meant many of these people were unable to return to their jobs in offices, factories and ports until only recently.

Some firms which have reopened have faced shortages of parts and other raw materials as well as labor, while others report inventories of finished goods such as steel are piling up as downstream customers like car plants slowly crank up production again.

Iron ore imports rose 1.5% over the first two months, supported by firm demand at steel mills even though the coronavirus outbreak had disrupted downstream sectors.

Parts of central Hubei province, the epicenter of the outbreak and a major transport and manufacturing center, are expected to remain under lockdown well into March.

Analysts at Nomura estimate only 44% of the businesses worst affected by the outbreak had resumed operation as of March 1, and 62.1% across the economy as a whole. As such, they forecast economic growth will slump to 2% in the first quarter year-on-year, from 6% in the previous quarter.

Beijing has already stepped up support measures, including offering cheap loans to affected businesses, and policy sources have told Reuters that more steps are expected as authorities try to cushion the epidemic’s impact on the economy.

China’s commerce ministry said on Thursday that more than 70% of foreign trade companies in the coastal provinces have resumed work.

But financial magazine Caixin reported this week that some companies were keeping machines running and lights open throughout the day even though they have no goods to produce, in a bid to allow managers and local officials to inflate the official work resumption rate. Reuters wasn’t able to verify this report.




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Market Turbulence: Investors Sell Bonds And Bank Stocks In Europe On Fears Of A Deeper Slowdown

The market rout in stocks spilled into the corporate-debt markets Friday after investors began to more fully assess the harm that prolonged economic disruption from the coronavirus could do to highly indebted companies.

Reaction to the virus had been relatively muted in credit markets, where yields on even riskier junk bonds and loans had remained below levels seen during the selloff in late 2018. However, data on Thursday showed accelerating withdrawals from U.S. high-yield bond and loan funds in the past week, which was followed by a drop in European bank stocks driven by investors’ concerns over loan losses.

In Europe, the cost of protection on risky corporate credit jumped to its highest level in nearly four years on the leading IHS Markit index of riskier credit derivatives, the iTraxx Crossover. The cost rose to more than €388,000 ($436,000) annually to cover €10 million of bonds.

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This followed a sharp rise in the U.S. CDX High Yield index, showing that it cost more than $409,000 annually to protect $10 million of bonds at the close on Thursday. The price of a BlackRock Inc. exchange-traded fund that often serves as a proxy for the high-yield market—known by its ticker symbol HYG—fell to about $84.68 from $86.02 Thursday.

While selling was broad-based, bonds of companies in sectors that could be most affected by the spread of the coronavirus, such as travel and energy, fell especially sharply. The yield investors demanded to hold short-term bonds of American Airlines Group Inc. jumped as high as 12.4% from 5% earlier in the week, with prices falling as low as 86 cents on the dollar from 92.75 cents Thursday, according to MarketAxess.

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Amid a steep decline in oil prices, a Laredo Petroleum Inc. 9.5% bond due in 2025, which was issued at par in January, fell to 57.5 cents on the dollar from 69 cents Thursday.

Friday’s selling is notable because credit markets are critical to the functioning of the economy. Earlier this week, companies of varying credit quality were still issuing bonds, and the average yield of U.S. speculative-grade bonds remained below levels from last summer, according to Bloomberg Barclays data. But extended volatility could make it difficult for companies to borrow, exacerbating any economic hit from the coronavirus.

Today was the day when it flipped from equity market leadership of the selloff to credit market leadership,” said Barnaby Martin, head of European credit strategy at Bank of America Merrill Lynch. “We were building up vulnerabilities…this is what happens when the market reaches for yield, which is hubris.”

The rush to buy protection and withdrawal from bonds was driven by dedicated credit funds being forced to cut back positions, amplified by a lack of liquidity in the markets, according to one senior credit trader in London.

This follows a wave of withdrawals from U.S. funds that invest in riskier credit, according to LCD, the loan research arm of S&P Global Market Intelligence. More than $5 billion was pulled from U.S. high-yield bond mutual funds and exchange-traded funds in the week to March 4, up from $4.2 billion the week before, according to Refinitiv Lipper. There had been net inflows, year to date, before last week.

Funds that invest in risky loans, typically used to fund private-equity-backed companies, have also seen growing outflows, with $2.3 billion pulled in the week to March 4, bringing the total outflow over the past seven weeks to $4.7 billion, according to LCD.

After two weeks of equity market declines, corporate debt investors and analysts are growing more concerned about how economic disruption brought about by the coronavirus will hurt the cash flow and the credit quality of weaker companies, and particularly of smaller companies that typically have less capacity to bridge a drop on cash flows.

This is also one reason why bank stocks are getting hit, particularly in Europe, where there is already wide disruption to travel and one U.K. airline has been pushed into insolvency. The Euro Stoxx Banks index has dropped 7.5% in the past two days and is now down 24% since cases were reported in Italy in late February.

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Some analysts are now beginning to worry more about highly indebted businesses, and where exposures to them lie through the system of investment funds and structured products known collectively as the shadow banking sector.

“We are concerned that there are skeletons out there in closets we may not be aware of that come out in times like this, particularly leverage from the shadow banking system,” John Briggs, head of Americas strategy at NatWest Markets in New York, wrote in a Friday morning note. “I also worry about the small and medium sized businesses in particular.”





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Financial Markets – Investors Retreat From Stocks

Investors continued to pile into safe-haven assets Friday, pushing the yield on long-term U.S. government bonds to unprecedented levels and setting gold up for its best week in over a decade.





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The yield on the benchmark 10-year Treasury sank below 0.8% for the first time. Stock futures also retreated, with contracts linked to the Dow Jones Industrial Average declining 2.3%, pointing to a decline of over 600 points when the blue-chips index opens for trading in New York. On Thursday, all three major U.S. stock indexes had retreated more than 3%.

Oil prices added to the market turmoil Friday, with the global benchmark, Brent crude, declining 3.8% to $48.09 a barrel. Russia disagrees with OPEC’s preliminary agreement Thursday to cut output by 1 million barrels a day, The Wall Street Journal reported. OPEC members and their allies, led by Russia, are continuing to meet Friday in Vienna. Brent has declined 27% since the beginning of the year as the coronavirus has hammered demand.

The pan-continental Stoxx Europe 600 gauge also dropped 3.4% to its lowest level since August. Asia’s major equity benchmarks closed lower Friday, with the Shanghai Composite Index losing 1.2%.

“People are accepting the size of the crisis: they know the governments are doing the right thing but what your brain tells you logically isn’t always how you feel about something emotionally,’’ said Sebastien Galy, a senior macro strategist at Nordea Asset Management. NDA.FI -4.02% “We’re seeing the market’s emotional brain leading today.”

Investors sought out assets that are considered low in risk — such as government bonds and gold — on worries about the economic impact of the coronavirus. The yield on 10-year Treasurys slipped to 0.755%, after earlier notching a record intraday level of 0.701%. It had closed Thursday at 0.924%. The yield on the 30-year benchmark dropped to 1.352%.

The continued market jitters — even after the Federal Reserve unexpectedly cut rates and U.S. lawmakers approved roughly $8 billion in emergency spending — is focusing attention now on potential government measures to counteract the economic impacts of the coronavirus. But President Trump and White House officials have said they don’t see an immediate need to craft a broader fiscal-policy response because the economy has been faring well.




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Futures markets suggest the Fed’s key rate is likely to be in a range of just 0.25% to 0.5% by the end of April. That would be just 0.25 percentage points higher than the near-zero level that held from the depths of the global financial crisis until December 2015.

Investors are expecting rate cuts now and they are expecting [the cuts] to persist in the next two to three years,” said Homin Lee, Asia macro strategist at Lombard Odier. He said markets were pricing two to three further interest-rate reductions this year, and that these moves would only be partially reversed in the next three years.

Safe-haven assets gained, with the Japanese yen rising 0.9% against the dollar. Gold also rose 0.9%, and is on track for its best one-week performance since December 2008.

The ICE Dollar Index, which tracks the U.S. dollar against a basket of six major currencies, dropped 0.9% Friday.

Later in the day, the U.S. jobs report for February will offer fresh insights into the health of the U.S. economy before the coronavirus epidemic started to affect business activity. Economists surveyed by The Wall Street Journal are expecting 175,000 jobs to have been added last month and for the unemployment rate to be at 3.5%, a 50-year low.

The U.S. Commerce Department will also release data on the trade deficit, which is expected to have fallen to $46 billion in January from $48.88 billion the previous month.


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U.S. Stocks And Bond Yields Dropped As Anxiety About Virus Fallout Returns

The Dow Jones Industrial Average fell more than 650 points, or 2.5%, erasing much of the gains notched Wednesday. A strong Super Tuesday performance by former Vice President Joe Biden and growing signs of a coordinated response to the coronavirus had led to a sharp rally in U.S. stocks.

That enthusiasm quickly dissipated Thursday. The S&P 500 fell 2.3%. The Nasdaq Composite shed 1.8%. Losses in the stock market were broad, with all 11 of the S&P 500’s sectors falling in early trading Thursday.



It has been a dizzying week on Wall Street. Sharp stock swings up and down have dominated the week, continuing a bout of volatility that led to the worst selloff since the financial crisis last week.

“I know that these wild swings are overwhelming for all of us,” said Amy Kong, chief investment officer at Barrett Asset Management. “The situation is still unfolding.”

Still, some investors said they expected the stock market gyrations to continue, with much remaining unknown about how far the coronavirus will spread and its ramifications on economic growth around the globe.

In recent days, the outlook for corporate earnings and economic growth this year has darkened, weighing on the stock market. Many have been worried that the virus will harm consumer sentiment and business investment around the world.

Investors will analyze fresh economic data this week for signs of wilting growth. Data on Thursday showed that U.S. factory orders fell in January. New orders for manufactured goods decreased 0.5%, the Commerce department said, more than what economists surveyed by The Wall Street Journal had expected.


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On Friday, investors will be parsing the monthly jobs report to see if U.S. hiring remained strong in February. The number of Americans applying for first-time unemployment benefits fell last week, the Labor Department said Thursday, suggesting anxiety about the spread of the coronavirus haven’t yet affected layoffs.

The early stock decline Thursday suggests that steps by the Federal Reserve and U.S. lawmakers this week to bolster economic growth are failing to assuage investors.

Health authorities are warning that it may be impossible to fully contain the pathogen as infections are spreading within many communities. Meanwhile, steps taken to halt the outbreak have curtailed travel and business activity in the epicenters of the disease.

“There is a sense that there is only so much monetary policy can do, given markets have priced that in already,” said Jonas Goltermann, senior markets economist at Capital Economics. “Even with all the stimulus measures, those are not going to stop the virus and until there are signs the rate of infection is slowing we don’t think there will be a sustained rally.”

Investors are betting on more interest-rate cuts later this year, CME Group data show.

As stocks fell, investors sought the relative safety of government bonds, pushing the yield on the benchmark 10-year U.S. Treasury note down to 0.930%, from 0.994% at the close on Wednesday. Yields fall as bond prices rise.

The falling yields reflect high anxiety in markets as investors seek traditionally safer investments. They also have wide-ranging effects on borrowing costs and bank profitability. Shares of financial companies were some of the hardest hit in the stock market Thursday. Falling yields can crimp profits for big banks.

Meanwhile, mortgage rates fell to their lowest level on record Thursday as yields fell.

European stocks also fell, with the pan-continental Stoxx Europe 600 index down 1.6%. The basic resources sector and aerospace and defense companies were among the hardest hit.

U.S. stocks are poised to remain turbulent with the Cboe Volatility Index, or VIX, climbing to over 35. The index, sometimes known as Wall Street’s fear gauge, last week topped 40 to hit its highest level since 2011.
With volatility elevated and gauges of investor confidence low, markets are likely to keep swinging, according to Olivier d’Assier, head of applied research for the Asia-Pacific region at financial analytics firm Qontigo.

“We are going to be stuck in this for a while” Mr. d’Assier said. “You’ve got short-term traders buying on the stimulus and then you have medium- and long-term investors de-risking.”

Investor sentiment had shown signs of improvement Wednesday after U.S. lawmakers passed an $8 billion-emergency spending package on Wednesday to combat the coronavirus. Meanwhile, the International Monetary Fund detailed the $50 billion in lending programs it has that could help countries grappling with the virus.

Travel and leisure stocks continued to take a beating. Cruise line operator Norwegian Cruise Line Holdings fell about 9.8%, while Royal Caribbean Cruises dropped 12% as travelers continue to back out of planned cruises because of virus fears. American Airlines retreated 8.4%.

In contrast, most Asian markets rose Thursday, with the Shanghai Composite Index and Hong Kong’s Hang Seng Index both closing up around 2%.
Eli Lee, head of investment strategy at Bank of Singapore, said he viewed recent market action as noise. “The rebound is the latest in a series of gyrations we’ve seen, and reflects the fact equities were likely oversold,” he said.


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Mr. Lee said a coordinated international monetary and fiscal response would help boost financial conditions and investor sentiment, but added: “These are ultimately very blunt tools against a medical crisis that is poised to cause a sharp shock to consumer demand and production.”

In commodities, Brent crude, the global oil benchmark, wavered between gains and losses before edging down 0.6% in recent trading. OPEC has reached a preliminary agreement to cut crude output amid a global glut and eroding demand, The Wall Street Journal reported, as members of the oil-exporting group and their allies gather for a two-day meeting in Vienna. The collective plan, in response to the virus outbreak, still needs to be approved by Russia.

“In order for this to succeed, they need Russia to be onboard or they would just pass over market share to a major competitor,” said Ole Hansen, head of commodity strategy at Saxo Bank.





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Federal Reserve Delivered A Half Percentage Point Rate Cut Tuesday, But Markets Slumped On The News

The Federal Reserve’s extraordinary rate cut Tuesday is likely only the first of multiple efforts to stem fear over the threat the coronavirus poses to global growth and financial markets.

No sooner had the U.S. central bank announced a half percentage point reduction than market participants began speculating about what was next. Wall Street broadly expects the Fed to follow up with another cut in a few weeks followed by more monetary easing in April.

In fact, if reaction from Tuesday’s move is any indication, it will take a lot more for the Fed to assuage heightened worries over a virus-induced threat to the longest expansion in U.S. history.

“The question from here is what further adjustments do they make,” said Bill English, former head of monetary policy for the Fed and now a professor of finance at the Yale School of Management. “The answer to that is when their outlook for the economy changes, it may be appropriate to do something more. That’s going to be a hard thing to communicate over the next few months.”

Markets, indeed, will be demanding more action even if the coronavirus damage doesn’t show up in the data.

fed-rates

A Powell letdown
Fed Chairman Jerome Powell sought to quell some anxiety Tuesday when, during a news conference after the cut, he said he and the Federal Open Market Committee are “prepared to use our tools and act appropriately, depending on the flow of events.”

The market didn’t like it, though, and sold off sharply during and after his comments.

One source of disappointment may have come when Powell indicated that he doesn’t foresee the Fed expanding its balance sheet through asset purchases — quantitative easing — in response to current conditions.

“What they should have done is said we’re going to do whatever it takes,” said George Selgin, director of the Cato Institute’s Center for Monetary and Financial Alternatives. “It’s the path forward that’s more important than the step taken immediately.”

The “whatever it takes” approach would echo then-European Central Bank President Mario Draghi’s promise in 2012 to pull out all the stops to address the Continent’s debt crisis. The pledge was widely seen as helping to stem a panic that the euro zone was about to sink into a deep recession.


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Selgin said the Fed should have taken a similar approach, with adopting just a quarter-point cut but with a vow that it would deploy all its tools to make sure the coronavirus situation doesn’t create greater havoc.

“It was fine for the Fed to act immediately. But the less it does now in the way of actual cuts and the more it signals its willingness to make further cuts if necessary with clear goals of what ‘necessary’ means, it would have been all the better,” he said. “For one thing, you don’t want to waste your ammunition.”

Cuts in March and April
Indeed, with Tuesday’s announced cut the Fed now only has another percentage point, or 100 basis points, left to go. And Wall Street expects the central bank not to waste time in using up that remaining space.

Both Citigroup and Bank of America Global Research expect the Fed to do at least 25 basis points more at the March meeting. BofA sees another similar reduction in April; Citi sees either 50 basis points in March or 25 basis points in each month.

“Further cuts may be more controversial as some on the committee will want to wait-and-see how the 50bp (and 75bp from last year) work their way through the economy,” Citigroup economist Andrew Hollenhorst said in a note. “But either soft data or tighter financial conditions will likely convince most to cut further.”

Communicating further action will be complicated.

Tuesday’s emergency reduction was met with a sharp rally on Wall Street that quickly evaporated. Major indexes suffered losses in excess of 2% and the benchmark 10-year Treasury note yield fell below 1% for the first time ever.



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A fearful Fed
While markets wanted policy easing, the execution didn’t go very well.

“The communication of this stuff is always hard. No one ever knows what markets are thinking and doing,” English said. “But partly the lack of [positive] effect today is that maybe people thought they learned that the Fed was more worried than they thought.”

Cleveland Fed President Loretta Mester entered the conversation later in the day, saying during a speech in London that she thought the cut would help but noted that actions from other officials, particularly on the fiscal side and in health care, “would likely do more to support confidence and spending by helping to contain the spread of the virus.”

She did not indicate whether she would support further easing.

That decision will come down to the evaluation of a number of factors that will go behind the stock market and economic reports, which operate on a lag and don’t always represent current conditions, said Lou Crandall, chief economist at Wrightson ICAP.

“They do need to see more evidence of actual concrete distractions to the business environment,” Crandall said. “If the contours of the virus impact on the U.S. economy become more clear, a rate cut won’t solve all our problems, but it will be helpful.”


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Wall Street Tries To Recover From Massive Sell-Off

Stocks rose sharply on Monday in volatile trading as Wall Street attempted to pare losses incurred during the worst week since the financial crisis amid fears of the coronavirus outbreak.

The Dow Jones Industrial Average traded 576 points higher, or 2.3%. The S&P 500 and the Nasdaq Composite climbed 2% each.

“The market has been conditioned to buy on any weakness,” said Keith Buchanan, portfolio manager at GLOBALT. “I think we’ll look back at these past few years at some point as some level of complacency.”

“Buying the dip takes more bravery now,” Buchanan said.

Stocks briefly came off their highs after a key measure on the U.S. manufacturing showed a slowdown last month. The ISM manufacturing index fell to 50.1 in February, the lowest level since the end of 2019. It also came below an estimate of 50.8.

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Apple shares led the Dow higher with a 7% jump; Merck and Walmart gained 4.6% and 6.5%, respectively. Consumer staples, utilities and real estate were the best-performing S&P 500 sectors, advancing more than 3% each. Tech, meanwhile, jumped 2.9%.

Monday’s moves mirrored the volatile overnight session where Dow futures traded in a range of more than 1,000 points, indicating this week may be as volatile as last week as well.

The Dow, S&P 500, and Nasdaq Composite all fell more than 10% last week, their biggest weekly declines since October 2008. They also entered correction territory, down more than 10% from all-time highs notched earlier in February. Both the Dow and S&P 500 have fallen for seven straight days.

Those declines came after a sharp increase in coronavirus cases outside of China. The number of cases continued to increase over the weekend, including in the U.S.

“The outbreak of Covid-19 has certainly changed the near-term narrative,” said Chetan Ahya, global head of economics at Morgan Stanley, in a note to clients Sunday. “It is an untimely shock, considering that the starting point of global growth was weak, and the recovery was very nascent.”

As of Sunday, more than 89,000 cases have been confirmed around the world along with more than 3,000 virus-related deaths. Australia, Thailand and the U.S. reported over the weekend their first coronavirus-related deaths. Rhode Island was the first U.S. state on the East Coast to report a coronavirus case. The number of cases in England rose to 35 after 12 new cases were confirmed on Sunday. Cases in China also reported more than 500 new cases on Saturday. New York Gov. Andrew Cuomo confirmed Sunday night the state’s first positive coronavirus case.



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Horrible China economic data
Wall Street got its first look over the weekend at the economic toll the virus has taken on China, the epicenter of the outbreak.

A private survey on Chinese manufacturing activity released during Asian trading hours on Monday came in at its weakest level ever. The Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) came in at 40.3 for February, far below expectations of a reading of 45.7 by economists in a Reuters poll. PMI readings above 50 indicate expansion, while those below that level signify a contraction.

That came after an official data released Saturday showed China’s official manufacturing PMI plunging to 35.7 in February, a record low, from 50 in January. A reading below 50 indicates contraction in a sector.

The plunge “shows the extent to which an outbreak can hit an economy,” said Ed Hyman, a widely followed economist on Wall Street and Evercore ISI chairman, in a note to clients. “All this is quite uncertain, and we may be overreacting. But we also don’t want to underreact.”

Gaming revenues in Macau also plunged nearly 88% last month.

Worries over the coronavirus’ impact on corporate profits and the global economy led investors to seek safer alternatives to stocks, pushing U.S. Treasury yields to all-time lows. On Sunday night, the benchmark 10-year rate broke below 1.04% for the first time ever. It was last at 1.07%.

“Global investors will be prone to panic as the virus arrives at their doorstep, underscoring the need for near-run prudence and patience before augmenting favored holdings,” strategists at MRB Partners wrote in a note. “The outlook is uncertain, or rather certainly bearish in the near term as quarantining spreads around the world, but with considerable doubt as to the duration and depth of the economic fallout.”

The virus’ quick spread has raised expectations for easier monetary policy from global central banks, including the Federal Reserve.

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CME Group’s FedWatch tool shows traders have priced in a 100% probability of a 50 basis-point rate cut later this month. Expectations for another rate cut in April are around 70%.

“The ultimate risk factor in our view is the U.S. consumer,” said Gregory Faranello, head of U.S. rates trading at AmeriVet Securities. “We have coronavirus cases showing up in the U.S. To the extent that that continues to spread, which we all hope will not be the case, the risk factor for the Fed grows because this now is no longer something that they can point the finger to relative to tariffs and say the global economy is slow, but we’re okay.”



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Global Markets – Top 5 Things to Watch This Week

The week will start after Saturday’s data showing a record contraction in China’s manufacturing and service sectors because of the coronavirus outbreak, underlining the extent of the potential impact on the broader global economy.

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Investors will also be closely watching comments from Federal Reserve policymakers this week, with the prospects of a March rate cut on the rise. Friday’s U.S. jobs report is likely to be overshadowed by the market turmoil, but the race for the Democratic U.S. presidential nomination could divert some attention from the spread of the coronavirus. OPEC is to meet later in the week and with oil prices now down 25% so far this year pressure for additional output cuts is mounting. And the Bank of Canada may surprise investors with a rate cut at its meeting on Wednesday. Here’s what you need to know to start your week.




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1 – China PMI data to shock markets
Data on Saturday showed factory activity in China contracted at its fastest ever in February, even worse than during the global financial crisis of 2008. The shockingly weak data is likely to add to fears that the world’s second largest economy may not rebound as quickly as investors had initially hoped.

Another report on Sunday showing that South Korean exports snapped a 14-month losing streak in February masked disruptions from the coronavirus, reflected outside the headline figures.

The coming days will reveal whether the outbreak is accelerating in the United States, the world’s biggest economy, how much the U.S. government is prepared to deal with an epidemic, and the economic damage in other countries.

“Right now the market is saying that this is unbounded. We don’t know what the limits are and we don’t know where it’s going to peak,” said Graham Tanaka, chief investment officer at New York-based Tanaka Capital.

2 – The Fed and U.S. data
Surveys of U.S. manufacturing activity from Markit and the Institute of Supply Management on Monday will give investors a chance to assess the economic impact of the virus. Friday’s U.S. nonfarm payrolls report for February will be watched for indications on the strength of the labor market before coronavirus spread more widely. The consensus forecast points to non-farm payrolls gaining 175,000, slowing from 225,000 in January.

Several Fed speakers are due to make appearances this week, Including Cleveland Fed President Loretta Mester, St. Louis Fed chief James Bullard, Dallas Fed head Robert Kaplan, Minneapolis Fed President Neel Kashkari and New York Fed President John Williams.

The likelihood of a March rate cut by the Fed has risen in the past week with the U.S. economy looking increasingly vulnerable to the outbreak. Fed Chairman Jerome Powell said Friday that the U.S. central bank will “act as appropriate” as the virus poses “evolving risks” to the economy.

3 – Super Tuesday
Investors will be looking ahead to Tuesday, when 14 states will cast ballots as the race for the Democratic U.S. presidential nomination intensifies.

Market watchers are waiting to see whether progressive Senator Bernie Sanders consolidates his lead or if moderates such as former Vice President Joe Biden or former New York Mayor Michael Bloomberg can make inroads.

Sanders campaign promises to break up big banks, take on drug companies and essentially abolish private insurance in favor of a single government-run plan have rattled some investors.

Shares of health insurers such as UnitedHealth Group (NYSE:UNH) and Centene Corp. (NYSE:CNC) have sold off in recent months amid growing concerns over the potential nomination of Sanders or fellow candidate Elizabeth Warren.

While investors have been more focused on coronavirus developments, some analysts have said Sanders’ rise in the polls also contributed to the recent sell-off. Some investors also noted that continued volatility in markets or an economic downturn could erode support for U.S. President Donald Trump.

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4 – Bank of Canada to make preemptive rate cut?
The Bank of Canada is to hold its latest policy setting meeting on Wednesday, the second to last such meeting before Stephen Poloz steps down as Governor.

Heightened financial market volatility amid fears over the coronavirus outbreak mean that the odds of a rate cut are rising, despite a strong domestic jobs market and inflation that is running roughly in line with the bank’s target.

Growing concern about the economic impact of protests opposing the Coastal GasLink pipeline that have severely affected the country’s rail network have also fed into expectations for a rate cut.

“The BoC has a reputation for moving early and occasionally providing surprises and we certainly think they could choose to pre-emptively cut this coming week. After all, they have much more room to offer support than most other developed markets, given their policy rate,” analysts at ING wrote.

5 – OPEC facing challenge of slumping demand outlook
The Organization of the Petroleum Exporting Countries and its allies including Russia – known as OPEC+ – meet in Vienna on Thursday and Friday as the spread of coronavirus around the world stokes fears that a slowing global economy will hit energy demand.

Friday saw the lowest closes for both Brent and WTI since December 2018. For the week, Brent lost almost 14%, its biggest weekly percentage decline since January 2016, while WTI fell over 16% in its biggest weekly percentage drop since December 2008.

“OPEC+ will have to deliver a deeper production cut as oil prices remain in freefall,” Edward Moya, senior market analyst at OANDA in New York, said in a report.

The group has already slashed oil output by 1.7 million bpd under a deal that runs to the end of March. In an initial response to counter the hit of the virus, an OPEC+ committee has recommended deepening output cuts by 600,000 bpd, but that figure is now seen as not enough by some in the group.




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Day Trading – Stock Market: 3 Things Under the Radar This Week

It was no ordinary week on Wall Street. The broader market recorded its fastest correction in history and its biggest loss since the Financial Crisis as the spread of the coronavirus gathered pace.

But there are questions on how much the Federal Open Market Committee really can help equities.

Retail sales may be the helping hand to the U.S. economy and there’s evidence some market players just don’t know which ticker is the right one.

Here are three things that flew under the radar this week.



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1. Little Hope Fed’s Easing Medicine a Match for Coronavirus Fallout

Wall Street’s fast-paced selling strengthened calls for a Federal Reserve rescue mission. And at long last, Fed Chairman Jerome Powell appeared to answer the call — at least partly.

In what may be the strongest indication yet that rate cuts are coming soon, Powell flagged the coronavirus as “evolving risk” and pledged to support the broader economy.

Powell said the “fundamentals of the U.S. economy remain strong,” but vowed that the central bank would use its tools and “act as appropriate to support the economy,” as “the coronavirus poses evolving risks to economic activity”

But with the bulk of damage from the outbreak, particularly in China, expected to hit supply more than demand, some have cast doubt on the power of monetary policy to take on the virus-led crisis.

“The problem with doing monetary stimulus is that it will have limited impact on the effects of the virus,” said Jens Peter Sorensen, chief analyst at Danske Bank A/S, in Copenhagen. “The Covid-19 virus is keeping people from work, the supply chain is disrupted and tourists are not going to Italy. Monetary policy can do very little.”

While others agree that monetary policy will do little to speed up the opening factories and ease travel restrictions, they argue that not only inaction, but a lack of bold action from the Fed may prove economically detrimental.

“Although moderate Fed rate cuts are unlikely to be very powerful, the committee will probably be reluctant to disappoint market expectations for substantial rate cuts for fear of tightening financial conditions further,” Goldman Sachs said in a note.

The investment bank said it expected the Fed to cut interest rates by 75 basis points by June, with first cut coming as soon as March.

2. Shoppers Gonna Shop?

With Covid-19 threatening to become a pandemic and countries looking at various quarantine measures, service-heavy economies are looking at a sharp drop in economic activity.

But the U.S. National Retail Federation released a report this week that expresses confidence that the consumer will remain resilient, even in the face of Black Swan events.

Retail sales will rise 3.5% to 4.1% to between $3.93 trillion and $3.95 trillion in 2020, the NRF said. Online sales will be up between 12% and 15%.

“With gains in household income and wealth, lower interest rates and strong consumer confidence, we expect another healthy year ahead,” NRF President and CEO Matthew Shay said in a statement.

“There are always wild cards we cannot control like coronavirus and a politically charged election year,” Shay said. “But when it comes to the fundamentals, our economy is sound and consumers continue to lead the way.”

On Friday, the University of Michigan said its February consumer sentiment index came in at 101, up from 99.8 in January.

3. Pushing the Panic Button

Is Covid-19 dealing with not just “panic selling,” but also “panic buying”?

The money pouring into any stock with Zoom in the name says so.

With companies facing possibly protracted times with employees staying at home, video conferencing will be essential to keeping businesses running. With that in mind, investors have been buying shares of Zoom Video Communications (NASDAQ:ZM).

The company “is widely considered the leader in modern enterprise video communications, with an easy, reliable cloud platform for video and audio conferencing, online meetings, chat and webinars,” Investing.com’s Jesse Cohen wrote.

The stock is up about 40% year to date.

But less-than-fastidious buyers have also been snapping up shares of Zoom Technologies (OTC:ZOOM), an over-the-counter stock that isn’t really in business anymore and hasn’t reported earnings since 2011.

Because it has the catchier ticker of “ZOOM,” it’s up 140% in the last five trading days.

While Zoom Technologies has seen ancillary benefits, Constellation Brands (NYSE:STZ) is dealing with reports of consumers being afraid of its Corona beer due to the similarity of the beer’s name and the coronavirus.

But Constellation said reports sales are plunging are “unfounded” and that sales of Corona are climbing in the U.S.




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Financial Markets – Panic Selling Continues as Dow Tumbles Below 25,000

Panic selling continued in the U.S. stock market on Friday, putting the market on course for its biggest weekly loss since 2008 amid growing signs that the coronavirus outbreak will ultimately cause an economic shock in Western economies as well as in China and its Asian trading partners.

The Dow Jones Industrial Average opened with another loss of 627 points, or 2.6%, taking it below the 25,000 mark. By 10:33 AM ET (1533 GMT), the DJIA was down 4%, or 1,034 points.

The S&P 500 was down 3.4%, at its lowest since October 2019. The Nasdaq Composite, meanwhile, fell 2.7%.


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Overnight, another sharp jump in the number of confirmed Covid-19 cases in South Korea and Iran, coupled with new emergency virus containment measures in Germany, Switzerland and elsewhere, all contributed to keeping the mood negative. A better-than-expected monthly rise of 0.6% in U.S. personal income in January was of little consolation.

“The landscape remains very uncertain,” said Mark Dowding, chief investment officer of BlueBay Asset Management in a weekly note. “For now, there is a sense with the coronavirus that things will need to get worse before they can get better.”

He argued that the point of “maximum bearishness” could be another couple of weeks away.

“This could coincide with the moment that Covid19 is officially declared a pandemic by the World Health Organization,” something that could lay the groundwork for a coordinated response of policy stimulus, Dowding argued. Such hopes seem far away at the moment, with the U.S. and German governments both playing down the seriousness of the situation.



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The bond market is now betting heavily on the Federal Reserve riding to the rescue. The2-Year Treasury bond yield dipped below 1% overnight and then roared lower to 0.91% after St. Louis Fed President James Bullard indicated that the Fed, if not fiscal policy, would react to a global pandemic.

“Further policy rate cuts are a possibility if a global pandemic actually develops with health effects approaching the scale of ordinary influenza, but this is not the baseline case at this time,” Bullard, who doesn’t vote on monetary policy this year, said Friday in prepared remarks to be delivered in Fort Smith, Arkansas.

Hot money continued to flood out of Tesla (NASDAQ:TSLA), which lost another 7.1%, taking its losses for the week to over 30%.

Beyond Meat (NASDAQ:BYND) suffered similar problems following a surprise quarterly loss after the bell Thursday, losing 17.6%. It’s now down 25% for the week.

Apple (NASDAQ:AAPL) was also the subject of some heavy profit-taking, falling 5.1% to its lowest since December. None of the companies mentioned released any news of note.

One stock emphatically bucking the trend was Zoom Video Communications (NASDAQ:ZM), the maker of software for video conference calls. Zoom Video stock has been flying as participants price in a boom in such calls as Covid-19 spawns a global outbreak of working from home and restrictions on business travel.

JPMorgan (NYSE:JPM), L’Oreal (PA:OREP) and Nestle (SIX:NESN) have all said this week they intend to limit staff travel as a result of the outbreak.



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Stock Market Corrections: How Bad Can They Get And How Long Can They Last?

With the stock market sliding lower as coronavirus fears rise, all the talk about a so-called “correction” can cause nervousness and confusion.




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A correction is a mechanical-sounding term to describe when a major stock market index like the Standard & Poor’s 500 falls 10% or more from a recent closing high. The recent losses on Wall Street officially pushed all three benchmarks into correction territory during trading Thursday.

The Dow Jones industrial average tumbled as much as 1,190 points, while the S&P 500 and the Nasdaq Composite both dropped more than 4%.

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It took just eight calendar days for the S&P 500 index to meet the 10% threshold — its fastest such drop since World War II, according to Sam Stovall, chief investment strategist at financial-research company CFRA.

“The swiftness of this decline signals the magnitude of uncertainty being expressed by investors,” Stovall said. “Even though history says that other viruses haven’t been a major event to corporate bottom lines, investors are thinking this time might be different.”

How bad were the biggest corrections?

Since a correction is a drop between 10% and 19.99%, there’s always a chance we’re only about halfway through this recent scare. The market fell more than 19 percent in corrections in 2018, 2011, 1998 and the 1976-78 period, CFRA data shows.

But even so-called “garden variety” corrections can cause fear levels to spike.

The good news? Not every correction morphs into a more feared bear market, a 20% or higher drop. The average bear since 1929 has sliced nearly 40% off the S&P 500.

Most bear markets coincide with a recession.

In the 23 corrections since World War II the average price drop for the S&P 500 has been 14 percent, according to data from CFRA. They normally last around 4.4 months.

Greg McBride, a chief financial analyst for Bankrate.com, thinks a recession is an unlikely, but “ever-present threat.”

“We’re not immune from the economic cycle. Disruptions to economic expansion can certainly be the catalyst for a recession,” McBride said. He added that the jumpy stock market is a reflection of uncertainty surrounding the spread of coronavirus.

“In the face of uncertainly, markets and valuations are being subjected to a rapid reevaluation. That’s what’s underpinning the selling action that’s been prevalent this week,” McBride said.



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China Makes Bad Loans Disappear as Virus Pummels Banks

Chinese banks are taking extraordinary measures to avoid recognizing bad loans, seeking to shield themselves and cash-strapped borrowers from the economic fallout of the coronavirus outbreak.

Some of the measures, which include rolling over loans to companies at risk of missing payment deadlines and relaxing guidelines on how to categorize overdue debt, have the explicit approval of regulators in Beijing. Some lenders are also refraining from reporting delinquencies to the country’s centralized credit-scoring system and allowing borrowers to skip interest payments for as long as six months, according to people familiar with the matter, who asked not to be named discussing internal decisions.


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The moves will buy time for both Chinese companies and the nation’s $41 trillion banking industry, after the outbreak brought much of the world’s second-largest economy to a standstill. But they’re also fueling concern about a buildup of hidden risks on lenders’ balance sheets. Some analysts worry that China is reversing a multi-year push to increase the transparency of its financial system and undermining the long-term health of banks.

“This will provide breathing space,” said Harry Hu, a credit analyst at S&P Global Ratings. “It will also likely undermine standards, making some Chinese banks less creditworthy in the long run.”

Earlier this month, S&P said a prolonged health emergency could cause China’s non-performing loan ratio to more than triple to about 6.3%, amounting to an increase of 5.6 trillion yuan ($800 billion) in bad debt.

The push by banks and regulators to tamp down NPLs is part of a broader effort by President Xi Jinping’s government to shore up the Chinese economy, which some forecasters say may suffer a rare quarter-on-quarter contraction in the first three months of this year. In addition to pumping billions of yuan into the banking system to make it easier for lenders to extend credit, authorities have cut interest rates, reduced taxes and pledged to adopt more “proactive” fiscal policies.

Shares of Chinese banks continued to under-performer the benchmark index this year in Hong Kong. The four biggest state-owned banks are trading at an average 0.5 times their estimated book value for this year, near the record low.

The NPL measures mark an abrupt shift in China’s approach toward financial regulation. Authorities in Beijing have spent the past three years trying to instill more discipline in the banking system and develop credit markets that more accurately price risk. As part of that effort, they’ve encouraged banks to be more diligent when accounting for bad loans.

The outbreak has changed the government’s priorities. In a press conference this week, Ye Yanfei, an official at the China Banking and Insurance Regulatory Commission, said policy makers need to be more tolerant when it comes to bad loans. “Saving corporates now is saving banks themselves,” Ye said.

China isn’t the only country to have relaxed accounting standards for banks during a crisis. In April 2009, during the depths of the global recession, mark-to-market rules in the U.S. were eased after banks complained that they resulted in bigger-than-warranted writedowns on thinly traded mortgage securities. While critics of the decision said it reduced transparency, it arguably helped big American lenders recover more quickly from the crisis.

China’s ability to control the pace of NPLs during economic shocks is an advantage of its centralized financial system, according to Leland Miller, the chief executive officer of China Beige Book.

“When you have a party that controls all the counterparties in the economy — you have state banks loaning to state enterprises and you have state banks loaning to small- and medium-sized enterprises — you can tell them to lend,” Miller said in an interview on Money Undercover with Bloomberg TV’s Lisa Abramowicz. “You never have to freeze up liquidity in the same way that a commercial financial system would work.”

Yet even if China’s banks turn on the credit taps, lots of businesses may struggle to secure the funding they need to stay afloat.

A survey of small- and medium-sized Chinese companies conducted this month showed that a third of respondents only had enough cash to cover fixed expenses for a month, with another third running out within two months. About two-thirds of the country’s 80 million small businesses, including many mom-and-pop shops, lacked access to loans as of 2018, according to China’s National Institution for Finance & Development.

It remains to be seen whether the benefits of delaying NPLs will outweigh the costs. Much depends on how quickly Chinese authorities can contain the outbreak and get the country back to work. In the week to Feb. 21, the economy was likely running at 50%-60% capacity, according to Bloomberg Economics.



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A sharp recovery in coming months would likely ease concerns that banks are obscuring the true health of their balance sheets. “If they can tide the virus over, then the delinquent loans will disappear,” said Zhang Shuaishuai, a banking analyst at China International Capital Corp.

But that’s far from a given. S&P analysts see scope for caution, saying last week that it may take years for the industry to revert to normal standards for recognizing NPLs and that some banks may see their long-term health suffer as a result.



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Wall Street Slips Into Correction Territory

Wall Street‘s main indexes fell for the sixth straight session and slipped into correction territory on Thursday, as the rapid spread of the coronavirus outside China intensified fears about the hit to economic growth and corporate earnings.

The S&P 500 and Nasdaq are now more than 10% below their intraday record highs hit on Feb. 19, while the Dow Jones Industrials is 10% off its Feb.12 peak.

The indexes were set for their steepest weekly pullback since the global financial crisis as rising number of new infections outside China raised fears of a pandemic.

Adding to worries, the U.S. Centers for Disease Control and Prevention confirmed an infection in California in a person who reportedly did not have relevant travel history or exposure to another known patient.

“In the recent week, markets have come to realize that the outbreak is much worse and are now realistically pricing in the impact of the virus on the economy,” said Philip Marey, senior U.S. strategist at Rabobank.

“In that sense it’s a bit of a catching up from the relative optimism that was there in the beginning when markets thought (the virus) will be contained to China with some minor outbreak outside.”

Industry analysts and economists continued to sound the alarm as they assessed the impact of the coronavirus, with Goldman Sachs (NYSE:GS) saying U.S. firms will generate no earnings growth in 2020.

Bank of America (NYSE:BAC) slashed its global growth forecast to the lowest level since the peak of the financial crisis.

At 10:08 a.m. ET, the Dow Jones Industrial Average was down 573.93 points, or 2.13%, at 26,383.66, the S&P 500 was down 67.33 points, or 2.16%, at 3,049.06. The Nasdaq Composite was down 221.07 points, or 2.46%, at 8,759.70. All of the 11 S&P sectors were deep in the red with energy losing the most, down 4.1%. Technology, financial, industrials, consumer discretionary, materials and communication services sectors dropped more than 2% each.

Declining issues outnumbered advancers for a 8.83-to-1 ratio on the NYSE and for a 8.65-to-1 ratio on the Nasdaq.

The S&P index recorded four new 52-week highs and 90 new lows, while the Nasdaq recorded 15 new highs and 361 new lows.



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