Market Talk – April 2, 2020

ASIA:

India’s policy makers are preparing a plan to carefully analyze a tough trade-off. They are considering a continued lockdown post-April 14, 2020, at the cost of longer-term economic devastation, or a rational “unlocking,” allowing India to return to work. Based on pre-COVID-19 projections of India’s GDP, the average daily GDP value for FY2021 was estimated at $8 billion. A 30-day lockdown would, thus, imply a maximum possible loss of $240 billion. The actual loss, however, would be lower, and a part of the loss could be recouped in H2 FY2020 as latent demand is realized.

Disney has launched its streaming services- Disney+ in India through Hotstar, a popular on-demand video streamer it picked up as part of the Fox deal.

India’s prime minister informed the Chief Ministers of their states to follow a staggered exit in phases from its vast nationwide lockdown of 21 days. He told state chief ministers that the shutdown had helped limit infections but that the situation remained far from satisfactory around the world and there could be a second wave. India has had 2,069 confirmed infections, of whom 53 have died.

The Henan province in central China has taken the drastic measure of putting a mid-sized county in total lockdown as authorities try to fend off a second coronavirus wave in the midst of a push to revive the economy. Curfew-like measures came into effect on Tuesday in Jia county, near the city of Pingdingshan, with the area’s roughly 600,000 residents told to stay home, according to a notice on the country’s official microblog account.

Shenzhen has become the first Chinese city to ban the sale and consumption of dog and cat meat. It comes after the coronavirus outbreak was linked to wildlife meat, prompting Chinese authorities to ban the trade and consumption of wild animals. The new law will come into force on May 1.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 decreased 246.69 points or -1.37% to 17,818.72
  • Shanghai increased 46.12 points or 1.69% to 2,780.64
  • Hang Seng increased 194.27 points or 0.84% to 23,280.06
  • ASX 200 decreased 104.30 points or -1.98% to 5,154.30
  • Kospi increased 39.40 points or 2.34% to 1,724.86
  • SENSEX closed

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.00399 or -0.66% to 0.60471
  • NZDUSD decreased 0.0023 or -0.38% to 0.5908
  • USDJPY increased 0.77 or 0.72% to 108.00
  • USDCNY decreased 0.0223 or -0.31% to 7.1008

Precious Metals:

  • Gold increased 14.40 USD/t oz. or 0.90% to 1,608.05
  • Silver increased 0.45 USD/t. oz or 3.21% to 14.4550

Some economic news from last night:

Japan:

Foreign Bonds Buying increased from -61.3B to -1.7B

Foreign Investments in Japanese Stocks increased from -1,474.7B to -1,421.9B

Monetary Base (YoY) decreased from 3.6% to 2.8%

South Korea:

CPI (YoY) (Mar) decreased from 1.1% to 1.0%

CPI (MoM) (Mar) decreased from 0.0% to -0.2%

Some economic news from today:

India:

Nikkei Markit Manufacturing PMI (Mar) decreased from 54.5 to 51.8

EUROPE/EMEA:

An EU court has ruled that Hungary, Poland, and the Czech Republic have failed to take in their quota of refugees from the Syrian war and could be fined as a result.

The European Commission is putting together a fund worth around 100 billion euros to help companies and employees who suffered at the hands of the coronavirus. Ursula von der Leyen also spoke on how the EU was prepared to help but did not signal support for the “coronabonds.”

The UN Economic Commission for Africa has issued a statement to the World Bank, IMF, and the EU that Africa is in need of debt relief amid the crisis.

The major Europe stock markets had a green day today:

  • CAC 40 increased 13.72 points or 0.33% to 4,220.96
  • FTSE 100 increased 25.65 points, or 0.47% to 5,480.22
  • DAX 30 increased 26.07 points or 0.27% to 9,570.82

The major Europe currency markets had a mixed day today:

  • EURUSD decreased 0.00922 or -0.84% to 1.08578
  • GBPUSD decreased 0.0012 or -0.10% to 1.23690
  • USDCHF increased 0.00627 or 0.65% to 0.97267

Some economic news from Europe today:

UK:

Nationwide HPI (MoM) (Mar) increased from 0.3% to 0.8%

Nationwide HPI (YoY) (Mar) increased from 2.3% to 3.0%

Swiss:

CPI (MoM) (Mar) remain the same at 0.1%

CPI (YoY) (Mar) decreased from -0.1% to -0.5%

Spain:

Spanish Unemployment Change increased from -7.8K to 302.3K

Euro Zone:

PPI (MoM) (Feb) decreased from 0.2% to -0.6%

PPI (YoY) (Feb) decreased from -0.7% to -1.3%

US/AMERICAS:

The number of unemployed Americans doubled in one week, according to the Labor Department. Around 6.6 million people filed for unemployment this week, surpassing all prior records. The figures released today brings the total number of jobless claims in just the past two weeks to 10 million.

Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, stated that a vaccine could be available within 12-18 months. As reported last week, Johnson & Johnson teamed up with Moderna to begin human trials. Dr. Fauci said that the vaccine must be tested at three different dosages before they confirm it is safe for the public. “The ultimate solution to a virus that might be coming back would be a vaccine,” said Dr. Fauci. In other news, Dr. Fauci had to increase his security team amid death threats.

The Democratic Party announced that they are postponing their next convention due to the coronavirus. The next convention, scheduled for August 17, is important as the party will select their candidate for the 2020 presidential election in November. Former Vice President Joe Biden remains the front-runner against Senator Bernie Sanders. The Republican Party will also host their convention in August, where they are largely expected to re-elect the current president.

Puerto Rico Governor Wanda Vázquez Garced extended the nation’s lockdown until April 12. The US plans to send Puerto Rico $3 billion in aid to combat the virus.

US Market Closings:

  • Dow advanced 469.93 points or 2.24% to 21,413.44
  • S&P 500 advanced 56.40 points or 2.28% to 2,526.90
  • Nasdaq advanced 126.73 points or 1.72% to 7,487.31
  • Russell 2000 advanced 13.81 points or 1.29% to 1,085.81

Canada Market Closings:

  • TSX Composite advanced 221.47 points or 1.72% to 13,097.84
  • TSX 60 advanced 12.86 points or 1.63% to 800.81

Brazil Market Closing:

  • Bovespa advanced 1,286.76 points or 1.81% to 72,253.46

ENERGY:

Prices of Crude today rose as much as 30% at one point during the day due to US President Trump’s request for both Russia and Saudi Arabia to stop the price war and cut the supply of the oil by 10 million barrels or more.

The oil markets had a mixed day today:

  • Crude Oil increased 3.99 USD/BBL or 19.65% to 24.3000
  • Brent increased 3.57 USD/BBL or 14.43% to 28.3100
  • Natural gas decreased 0.043 USD/MMBtu or -2.71% to 1.5440
  • Gasoline increased 0.0612 USD/GAL or 9.59% to 0.6992
  • Heating oil increased 0.038 USD/GAL or 3.95% to 1.0012
  • Top commodity gainers: Crude Oil (19.65%), Brent (14.43%), Gasoline (9.59%), and Cotton (4.48%)
  • Top commodity losers: Feeder Cattle (-5.55%), Live Cattle (-4.62%), Lean Hogs (-7.85%), and Coal (-2.86%)

The above data was collected around 11.35 EST on Thursday.

BONDS:

Japan -0.01%(-1bp), US 2’s 0.23% (-1bps), US 10’s 0.61%(-3bps); US 30’s 1.25%(-4bps), Bunds -0.44% (+3bp), France 0.05% (+4bp), Italy 1.47% (-8bp), Turkey 13.88% (+46bp), Greece 1.79% (+3bp), Portugal 0.83% (-4bp); Spain 0.71% (+1bp) and UK Gilts 0.33% (+2bp).

  • Japan 10-Year JGB Auction increased from -0.100% to 0.023%
  • US 4-Week Bill Auction increased from 0.000% to 0.090%
  • US 8-Week Bill Auction increased from 0.000% to 0.095%
  • French 10-Year OAT Auction increased from -0.32% to 0.04%
  • Spanish 10-Year Obligacion Auction increased from 0.661% to 0.715%
  • Spanish 3-Year Bonos Auction increased from 0.024% to 0.077%
  • Spanish 5-Year Bonos Auction increased from -0.260% to 0.535%