Market Talk – April 13, 2020

Posted Apr 13, 2020 by Martin Armstrong |

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ASIA:

India’s central Bank said in its Monetary Policy Report that the outlook for India’s economic recovery has been sharply altered by the coronavirus outbreak. India’s economy expanded at its slowest pace in more than six years in the last three months of 2019 and was projected to clock in full-year growth of 5% which would be the lowest in over a decade. Analysts have cut their 2020/21 GDP growth projections to 1.5-2%, levels unseen in India in decades.

Google launched a website dedicated to coronavirus updates in India and tweaked its search engine and YouTube to prominently display authoritative information and locally relevant details about the pandemic from the nation’s Ministry of Health and Family Welfare, the company said on Monday. Additionally, Google is also showing more than 1,500 food and night shelters in about three dozen cities in India on Google Maps and Search to guide people in need.

The Indian Council of Medical research has sought letters of intent from institutions with necessary equipment and infrastructure to participate in a clinical trial to study safety and efficacy of therapeutic plasma exchange in COVID-19 patients, subsequent to necessary approvals and clearances. India’s tally of positive COVID-19 cases rose to 10,452 following an increase of 1250 cases in the last 24 hours, the Union Ministry of Health and Family Welfare said on Monday.

New bank lending in China rose sharply to 2.85 trillion yuan ($405 billion) in March, with total social financing hitting a record, as the central bank pumped in more liquidity and cut funding costs to support the coronavirus-ravaged economy.

China’s northeast Heilongjiang province, which borders Russia, has become the new battleground against the coronavirus as authorities reported the highest number of new daily cases in nearly six weeks, driven by infected travelers from overseas.

The major Asian stock markets had a negative day today:

NIKKEI 225 decreased 455.10 points or -2.33% to 19,043.40
Shanghai decreased 13.58 points or -0.49% to 2,783.05
Hang Seng closed
ASX 200 closed
Kospi decreased 34.94 points or -1.88% to 1,825.76
SENSEX decreased 469.60 points or -1.51% to 30,690.02

The major Asian currency markets had a mixed day today:

AUDUSD increased 0.00358 or 0.56% to 0.63858
NZDUSD increased 0.00382 or 0.63% to 0.60902
USDJPY decreased 0.81 or -0.75% to 107.60
USDCNY increased 0.0134 or 0.19% to 7.0574

Precious Metals:

Gold increased 28.63 USD/t oz. or 1.70% to 1,712.45
Silver decreased 0.14 USD/t. oz or -0.87% to 15.3150

Some economic news from last night:

Japan:

M2 Money Stock (YoY) increased from 3.0% to 3.3%

M3 Money Supply (Mar) increased from 1,840.6T to 1,843.9T

Some economic news from today:

India:

CPI (YoY) (Mar) decreased from 6.58% to 5.91%

EUROPE/EMEA:

European markets were closed today due to the bank holiday after the Easter weekend.

A recent poll by the Tecne Institute, an Italian research firm, has shown that 49% of Italians would like for Italy to leave the EU after seeing the lack of support they feel they were given during the COVID crisis.

EU Commission head Ursula von der Leyen and her European Competition Commissioner Margrethe Vestager told the FT that Europe must be wary of Chinese takeovers during these times as businesses are weak and could be prone to buyouts. “It’s very important that one is aware that there is a real risk that businesses that are vulnerable can be the object of a takeover,” Vestager said.

In a recent interview, Russian Vladimir Putin criticized the EU for trying to sway traditional allies of Russia such as Belarus to form closer relations with the EU and alienate themselves from Russia. Putin likened this to “putting poison in their ears” and vowed that there will be repercussions.

BlackRock investment company has been hired by the EU to advise them on any new environmental rules for banks.

The president of France said that borders of the Schengen area could be closed until September in order to ensure there is no resurgence in the virus.

The UAE has launched the national home-based testing program for COVID-19. The program targets an important segment of society that may have difficulty doing tests outdoors. This is part of the national drive-through testing national program. Priority in drive-through tests are given for those with respiratory issues, seniors, and pregnant women.

The major Europe stock markets closed today:

CAC 40 closed
FTSE 100 closed
DAX 30 closed

The major Europe currency markets had a mixed day today:

EURUSD decreased 0.00204 or -0.19% to 1.09126
GBPUSD increased 0.00767 or 0.62% to 1.25177
USDCHF increased 0.00125 or 0.13% to 0.96695

US/AMERICAS:

The US government’s current lockdown restrictions are in effect until April 30, but many are questioning whether those restrictions will be expanded. Top expert Dr. Anthony Fauci was unable to give a clear timeline, but said at best some restrictions may be lifted by May. “We are hoping that, at the end of the month, we could look around and say, OK, is there any element here that we can safely and cautiously start pulling back on? If so, do it. If not, then just continue to hunker down,” Fauci stated. US President Trump declared today that he has the final say in when the economy reopens. “Let it be fully understood that this is incorrect. It is the decision of the President, and for many good reasons. With that being said, the Administration and I are working closely with the Governors, and this will continue. A decision by me, in conjunction with the Governors and input from others, will be made shortly!” President Trump tweeted.

The IRS began issuing relief checks over the weekend. Payments will be sent out in waves, where Americans can expect to receive up to $1,200. The IRS will begin issuing paper checks at the beginning of May.

The Treasury Department issued stricter guidelines for airlines seeking a bail out. “It is our objective to make sure, as I have said, that this is not a bailout, but to make sure that airlines have the liquidity to keep their workers in place,” Treasury Secretary Steven Mnuchin said in an earlier announcement. The department is now asking that airlines pay back 30% of the grants they receive.

After announcing the suspension of his campaign last week, Senator Bernie Sanders publicly endorsed Democratic frontrunner Joe Biden. Sanders referred to President Trump as “the most dangerous president in the modern history of this country” and urged Democratic voters to put differences aside to prevent Trump’s reelection.

US Market Closings:

Dow declined 328.60 points or -1.39% to 23,390.77
S&P 500 declined 28.19 points or -1.01% to 2,761.63
Nasdaq advanced 38.85 points or 0.48% to 8,192.42
Russell 2000 declined 34.68 points or -2.78% to 1,212.04

Canada Market Closings:

TSX Composite declined 90.69 points or -0.64% to 14,075.94
TSX 60 declined 6.09 points or -0.71% to 853.35

Brazil Market Closing:

Bovespa advanced 1,153.88 points or 1.49% to 78,835.82

ENERGY:

Crude oil bounced back in the case of WTI by 6.64%. US President Trump stated he could impose a tariff on foreign oil, which helped push up the domestic market. He also went on to say that the free market will help curb supply automatically. Today, the EIA report showed there was a significant build of 15.2 million barrels held in storage.

The oil markets had a mixed day today:

Crude Oil increased 0.34 USD/BBL or 1.49% to 23.1000
Brent increased 0.45 USD/BBL or 1.43% to 31.9300
Natural gas decreased 0.043 USD/MMBtu or -2.46% to 1.7030
Gasoline increased 0.0116 USD/GAL or 1.54% to 0.7637
Heating oil increased 0.074 USD/GAL or 7.61% to 1.0466
Top commodity gainers: Heating Oil (7.61%), Bitumen (6.48%), Palladium (3.71%), and Copper (1.77%)
Top commodity losers: Cotton (-3.33%), Live Cattle (-3.78%), Lean Hogs (-7.94%), and Feeder Cattle (-3.46%)

The above data was collected around 13.00 EST on Monday.

BONDS:

Japan 0.01%(+0bp), US 2’s 0.24% (+1bps), US 10’s 0.73%(+1bps); US 30’s 1.36%(+1bps), Bunds -0.35% (+0bp), France 0.12% (+1bp), Italy 1.62% (+1bp), Turkey 13.66% (+49bp), Greece 1.81% (-0bp), Portugal 0.87% (-2bp); Spain 0.80% (+1bp) and UK Gilts 0.31% (+0bp).