By Lorcan Roche Kelly
Ready to do more
The White House and congressional Democrats are preparing for another round of economic stimulus to get the U.S. through the virus shutdown. House Speaker Nancy Pelosi said her party is collecting information on what might be needed in the next package, with the peak of the outbreak in the U.S. not expected for a few weeks yet. There is also support for further measures from Republicans, with Senator Ted Cruz yesterday saying he has no doubt that Congress will have to act if the crisis continues for “substantially longer.” President Donald Trump said he considered a national stay-at-home order, but said it’s “pretty unlikely” as some parts of the country are “not in trouble at all.”
Goldman Sachs Group Inc. revised its forecast for second-quarter U.S. growth lower to an annualized minus 34%, with unemployment soaring to 15%. Still, economists at the bank see a mainly short-term hit, expecting a strong rebound in the third quarter. Hopes for the shutdown being relatively brief were bolstered by signs of stabilization in the number of new cases of the virus reported in the worst-hit areas of Europe, with the World Health Organization saying the outbreak in Italy and Spain may have peaked. While numbers from the U.S. are likely to continue to get worse, the rise in confirmed cases in New York is slowing.
Light at the end of the tunnel
There was some relief for oil traders as crude prices recover from an 18-year low, helped by early signs pointing to the end of the economic contraction in China. A barrel of West Texas Intermediate for May delivery climbed more than 5% this morning. The commodity, having its worst quarter ever, is starting to become a global political hot topic, with President Trump calling Russian leader Vladimir Putin yesterday to address market stability concerns. Despite some signs of support, oil remains under huge pressure with Goldman Sachs analysts projecting global consumption will drop by 26 million barrels this week.
Global equities are generally finishing a quarter for the history books on the front foot. Overnight the MSCI Asia Pacific Index slipped 0.2%, while Japan’s Topix index closed 2.3% lower after investors feared the government would be forced to implement stronger containment measures. In Europe, the Stoxx 600 Index, on track for its worst quarter ever, had gained 1.8% by 5:50 a.m Eastern Time. S&P 500 futures pointed to a gain at the open, the 10-year Treasury yield was at 0.692% and gold was lower.
There is some March data on the U.S. economy due this morning, with MNI Chicago PMI at 9:45 a.m. and Consumer Confidence numbers at 10:00 a.m., both expected to show significant declines. The Federal Reserve’s liquidity provision continues with two $500 billion overnight repo operations scheduled. Blackberry Ltd. and McCormick & Co. Ltd. report earnings.