News / Analysis
Finance Update – WHO OK’s COVID ProbeMay 20, 2020
Against all odds and with 99% of all major Chinese industrial firms back online, the People’s Bank overnight held interest rates steady at 3.85%.
Expectations were for additional government measures to help relieve the impact of the Corona Virus.
In Australia, retail sales contracted by 17.9% as Westpac’s leading index contracted by 1.5% – double March’s figure. To that nation’s satisfaction, the WHO yesterday passed a resolution calling for an independent probe into the global response to the coronavirus.
Indexes throughout Asia were mostly down, this morning, save Japan (+1%), Taiwan (+0.2%), and Australia (+0.4%).
Fresh from their ECB spat over fiscal easing measures, France and Germany have agreed to push for a ½ trillion euro recovery fund.
Economic sentiment in Germany and the EU in May soared to 51 and 46, respectively – more than double April’s figure as Europe begins to emerge from shutdown.
Construction in the EU contracted by 14.5% MoM in March. Benchmarks closed in the red yesterday, save Germany (+0.15%), Holland (+0.11%), and Switzerland (+0.24%) but the pound continues sideways despite a slew of evil data this morning that includes a halving of consumer inflation and retail prices to 0.8% and 1.5% YoY, respectively, and a 9.8% contraction (YoY) in producer prices.
With the world on Trade-War watch, WH adviser Larry Kudlow told reporters he doubted that China would decide to sell its 1 trillion dollars’ worth of US treasury bonds.
Fed head Powell told the Senate yesterday that – like the ECB – he too would be approving loans to individual states and cities.
Index drops yesterday were led by the DOW’s 1.6% fall, the Nasdaq losing half a percent.
Housing starts in April came in 30K less than expected in April while building permits, at 1.07mn exceeded expectations.
Reuters reports that the price of the Corona crisis to world stocks so far equals about 12 trillion dollars in Q1, followed by a 25% recovery so far.
Oil was unimpressed by last night’s API report of a 4.8mB drawdown in inventories. Either the relief already priced in or else the market awaiting today’s EIA confirmation – as last month’s OPEC+ production cuts and US rig closures finally begin to take effect.
One positive outcome of the 3-month lockdown has been an estimated 7% drop in carbon emissions. It is projected to continue as alternative energy in road transport – the bulk user of fossil fuels – takes up the slack of a weakened oil industry.
Walmart yesterday exceeded expectations with quarterly revenues of $134.6bn and an EPS of 1.18. Marks & Spencer deliver their latest quarterly earnings report today.
Caterpillar will be paying dividends, and Johnson & Johnson are finally removing their allegedly carcinogenic baby powder from shelves. The company still faces over 19,000 lawsuits in the US alone, after the original news release wiped about $40bn from the company’s market cap in 2018.
Meanwhile, Lenovo yesterday posted better-than-expected quarterly results, despite a 10% drop in revenues YoY.
Reuters also reports that a Saudi Arabian Public Investment Fund has managed to take advantage of the global equities slump to purchase about $10 bn worth of stakes in Boeing, Facebook and Citigroup.
US equity funds purchased a further 5.36 bn dollars’ worth. Spotify shares yesterday jumped 10% on the announcement of an exclusive Joe Rogan podcast series.
Also, Libra returns to the headlines, Mark Zuckerberg yesterday announced a new e-commerce platform that would be accessible through Facebook, Instagram and WhatsApp.
|09:00 AM GMT||EU||CPIs|
|12:30 PM GMT||Canada||CPIs, wholesale sales and housing prices|
|02:30 PM GMT||OIL||EIA Crude Oil Stocks Change|
|06:00 PM GMT||US||FOMC Minutes|
|11:00 PM GMT||Australia||CB PMIs. Gov. Lowe speaks at 2:30 AM tomorrow.|
|11:50 PM GMT||Japan||Trade Balance, Foreign investment and Manufacturing PMI at 0:30|