News / Analysis
Finance Update – Tunnel at the End of the TunnelApril 8, 2020
Asian indexes are showing red this morning, the Hang Seng down 0.77%, while the Nikkei continues to feel the support of government intervention. It is up 1.7%, led by the DJ NZ’s 2.78%.
Australia’s investment lending index was down 1.7% for the same month.
Japanese machine orders were up in February by 5% MoM, nearly double the previous reading, and February’s trade surplus was $12.5bn, on rising exports and shrinking imports. Chances are slim that all this will stave off an expected recession as the economy contracts 15%, the 3rd quarter in a row – expect further BoJ easing this month, based on a Reuters poll.
European indices yesterday reflected the previous day’s optimism in US markets by closing up a bit over 2% across the board. The FTSE led with 2.93%.
A survey by Reuters shows UK job vacancies shrinking for the 1st time in over a decade. Germany’s industrial production was up 0.3% MoM in March, while France’s trade deficit fell to €-5.22 B – not as much as expected.
The US fiscal response to the Coronavirus has ground to a halt as technical mishaps prevent payments and processing procedures grind the machinery to a halt.
The White House has asked Congress for an additional quarter trillion in aid – above the original 2.3. Tonight’s FOMC minutes has investors on edge, with policy-makers perhaps being shown up for undue optimism, and volatility in equities yesterday put a stop to the previous rally, which could easily reverse into a renewed plunge. US equities began to fall almost as the day began, yesterday, the Nasdaq losing 0.33%.
Futures overnight seem to be recovering some of that loss, the Dow currently fighting resistance at 22620.
The NFIB’s sentiment index for March was down 8 points to 96.4, the Redbook a point to 5.3% in April and February job openings at 6.882 million – much better than the expected 6.6.
Consumer credit soared in February to $22.33bn and yield on 3-year bonds at yesterday’s auction plummeted from 0.563% to 0.348%. In Canada, the March PMI is down by half at 26.
Oil was visibly oblivious to yesterday’s 12mB upswing in inventories – the bad news apparently already priced in. Backtracking on Trump’s sentiments, the US Department of Energy said that it would not intervene in the private market, thus invalidating hopes for an OPEC+ output cut, since Russia has stipulated US cuts in return.
Gold fell back through the 1700 gate but is now reattempting the band at 1686, while Bitcoin continues its very placid 3-week uptrend – now at 7359 – as a peer-to-peer exchange, Paxful, announces it will enable clients to exchange Btc for gold. The company saw a 27% spike in March transactions.
Amazon has said it would cease competing with UPS and FedEx for now, ceasing its delivery-service operation for non-Amazon transactions. And Tesla has finally announced it would furlough all non-essential workers and cut employee salaries. Company deliveries in this first quarter have exceeded expectations, and Musk expects to return to normal in early May.
Lufthansa said it would decommission 11 aircraft, discontinue its Germanwings brand and also reduce aircraft from its Cityline and Eurowings operations. GlaxoSmithKline today pays dividends, Nokia will be holding a shareholders meeting, and Airbus and Tesco present their 4th quarter annual report
|11:00 AM GMT||US||Mortgage Applications. FOMC Minutes at 6 PM|
|12:15 PM GMT||Canada||Housing Starts & Building Permits|
|02:30 PM GMT||OIL||EIA Crude Oil Stock Change|
|10:45 PM GMT||NZ||Credit Card Retail Saales|
|11:01 PM GMT||UK||Housing Price Balance|
|11:50 PM GMT||Japan||Foreign Investments. Speech by Kuroda at 0:30 AM (+1)|