News / Analysis
Finance Update – Asia Grinding to a HaltApril 16, 2020
Asian markets followed US equities down overnight, albeit not as harshly.
The Nikkei lost 1.37% as safe-havens begin attracting attention in anticipation of the ramifications of a premature end to US lockdown.
China reports a drop in imported Corona cases in Beijing, but a slight rise in transmitted cases.
The Australian Dollar bounced of support at 0.627 yesterday as overnight jobs data came in better than expected. Jobs reports show an added 6000 positions – a quarter of February’s reading, but at least not contracting, as expected., and participation remained steady.
The IMF estimates that economic growth in Asia is expected to grind to a halt this year for the first time in 60 years, Reuters reports. The outlet also mentions a naval standoff between Chinese and Vietnamese ships in the South China Sea.
As France reports a massive single-day death count (1,438 Corona victims), European benchmarks lost between 3.3 (AEX) and 4.8 (MIB) percent during yesterday’s session as earnings season launches. CPIs from across the Eurozone were mixed, France even managing to add a tick at 0.8% YoY in March.
The yield on German 30-year bonds is up to 0.09%, while in the UK, 10-year bills are offering 0.269% – a tenth less than at their previous auction. BRC retail sales for March contracted by 3.5% YoY in March, more than 10 times the rate the month before – the result of a 27% drop in sales for the past 2 weeks.
The S&P was down 2.2% yesterday as economists weigh the implications of Trump’s May 1st deadline for re-opening the economy.
The USD added a half percent overnight, after data came in red on most fronts.
Retail sales contracted by 8.7%, industrial production by 5.4% and the Empire State manufacturing Index sank to -78.2 for April – double the expected.
House Speaker Nancy Pelosi has rejected the Republican proposal for a 4th Corona relief bill, stating that it does not address the needs of local governments and small businesses.
On Tuesday, Bloomberg reported an influx of Hedge Fund requests for financial aid. In anticipation of tonight’s Jobless Claims data, the IBO assesses that New York City will lose nearly half a million jobs and $9.7 bn in tax revenues by mid-2021.
In response to the White House’s decision to halt funding to the World Health Organization, Bill Gates has said he would make up the shortfall. Meanwhile, a record 2482 New York residents have lost their lives to COVID-19 over the past 24 hours.
Economists polled by Reuters expect the US economy to contract by about 11% in Q1, the worst performance since 1947, with government relief providing little to no relief.
Oil yesterday slipped well below the $20 mark, trending as low as 19.20 before recovering back above after US markets returned from lunch. The main culprit was the EIA’s underscoring of overproduction with a 19.25 million barrel addition to crude inventories.
Gold, after peaking at 1775 on Monday has consolidated at 1745, where it calmly awaits tonight’s US jobless claims. And Bitcoin, after completing its head-&-shoulders returns to the 6500-7000 range.
Although being consistently beaten by gold’s performance, Coindesk claims that the token’s volatility has dropped well below that of the S&P.
As earnings season begins, Bank of America shares lost 6% on a 1% drop in revenue and a total miss of estimates, EPS down 43% YoY. Citi’s (-2%) EPS was 44% lower than the same quarter last year and Goldman Sachs’ by 45% YoY.
One more victim of the Corona retail crash is JCPenney, the 118-year-old retailer that has begun exploring bankruptcy filings, after having to close 850 stores, furlough 85,000 employees and begin refused any form of debt relief. And in response to the Corona-drop in retail sales, Apple is revealing a 2nd generation iPhone SE, priced at just under $400.
|09:00 AM GMT||EU||Industrial Production|
|12:30 PM GMT||US||Housing Starts & Permits & Jobless Claims|
|00:00 AM GMT||IMF Meeting|
|02:00 AM GMT (+1)||China||GDP, Retail sales & Industrial Production|
|04:30 AM GMT (+1)||Japan||Industrial Production|