• Dr Akela

Stocks Ease as Virus Cases Peak

What's New

. Asian stocks eased today, as worries about the economic damage already done has put a halt to growth, despite the efforts of some countries to re-open their economies. The Nikkei dropped 0.2% as S&P futures eased 0.5%, while European futures remained largely unchanged.

. China took further policy action as it cut a key medium-term interest rate to record lows. Despite this, Shanghai blue chips declined by 0.3%.

. At the moment, hopes of more stimulus, the flattening of infection curves and announcements that the "peak" has been reached have pushed sentiment higher, however, they are now worrying about the potential fallout from the crisis.

. In the US, some states considered relaxing restrictions despite the country's death roll rising by 2,228, a single day record. On move that made almost zero sense, Donald Trump temporarily halted funding to the World Health Organization, saying it should have done more to head off the pandemic.

. According to the IMF, the damage that has already been done would show the world's steepest recession since the Great Depression of the 1930s, with an IMF forecast of -3%. Analysts at JPMorgan suggest that corporate profitability could take a nearly 70% decline in 2020.

. The only winner at this point in time are the bond markets. Yields on the 10-year US Treasury stood around 0.74%, more than 100 basis points below where they started the year.

. As a result of the above, the US dollar was down against the Yen, with the dollar index standing at its lowest in two weeks.

. Gold was also a beneficiary of the crisis, with the lower interest rates and the tide of cheap money from central banks forcing the yellow metal to rise to $1724.

. In the oil markets, WTI rose slightly after a massive 10% drop yesterday, as investors still remain cautious that the supply cuts were not enough to counter the drop in demand. Crude oil inventories rose by 13.1 million barrels last week, higher than analyst expectations. Still the week reflected the one before the supply cut so the biggest numbers will be coming on the next.

.As OPEC sources have indicated, the International Energy Agency is seen to purchase several million barrels of oil to support the OPEC output cut. Similarly, the US Department of Energy is in talks with nine energy companies to store around 23 million barrels in its Strategic Petroleum Reserve. Such purchases are expected to increase in the coming days, across the world.

. Early today, Australia's consumer sentiment has taken a plunge, dropping by a staggering 17.7% in April, versus a 3.7% drop in March.

Up and Coming

. It's CPI day today across Europe, with French, Italian, and Spanish CPIs forecast to have remained close to zero in March.

. Core retail sales in the US stand out today, and are expected to have dropped by 4.8% on a m/m basis, while an 8% drop is forecast for overall retail sales.

. Also in the US, industrial production is forecast to have dropped by 4% while manufacturing production is seen to have declined 3.2.

. Crude oil inventories are forecast to have risen by less than the previous time, while no change is forecast at the Bank of Canada decision today, with rates expected to remain at 0.25%.

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