By Lorcan Roche Kelly
President Donald Trump abandoned his goal to reopen the U.S. economy in two weeks time, saying the guidelines for Americans to practice social distancing will now remain in place until April 30. National Institute of Allergy and Infectious Diseases Director Anthony Fauci warned that the death toll in the U.S. could hit 200,000, with the latest data showing over 140,000 cases of the virus in the country. President Trump did not impose a quarantine on the hardest hit areas, including New York City, after earlier floating the idea that it was a measure he was considering.
Throwing money at it
The moves from fiscal and monetary authorities across the globe to try to cushion the impact of the hard stop to economic activity continue to widen. Australia announced a record stimulus program as that country faces its biggest drop in output since 1931. Singapore’s central bank took unprecedented steps to adjust its exchange rate target, China’s top leaders pledged to widen the fiscal deficit and the Bank of Japan purchased a record amount of ETFs for the fourth time. In Europe, the push to issue so-called “coronabonds” is gaining support among leaders, with the countries opposed to the measure looking increasingly isolated.
The world is drowning in oil that nobody needs and it is causing huge problems for the market. Demand has collapsed, with the grounding of much of the world’s aircraft contributing to a drop of 5 million barrels a day in consumption alone. Gary Ross, an influential oil watcher and chief investment officer of Black Gold Investors LLC, said “the physical oil market has seized up,” comments backed up by numbers showing that some producers are having to pay to have their crude taken away. While major benchmarks are still some way from such levels, West Texas Intermediate for May delivery briefly traded below $20 a barrel this morning.
The huge volatility in global equity markets shows little sign of disappearing, with gauges again posting losses. Overnight, the MSCI Asia Pacific Index slipped 0.7% while Japan’s Topix index closed 1.6% lower. Australia’s S&P/ASX 200 gained 7% on the government stimulus announcement. In Europe, the Stoxx 600 Index was 0.7% lower at 5:50 a.m. Eastern Time with banks hit hardest as the ECB stepped up pressure on lenders to halt dividend payments. S&P 500 futures pointed to a drop at the open, the 10-year Treasury yield was at 0.638% and gold was lower.
There is more probably-very-stale economic data at 10:00 a.m. when February pending home sales numbers are published. President Donald Trump continues his media blitz with an appearance on Fox News at 7:55 a.m. The Federal Reserve will once again offer up to $1.5 trillion of liquidity across three repo operations today. Germany reports inflation for March at 8:00 a.m.