By Lorcan Roche Kelly
Reality sets in
There was a notable change in tone from President Donald Trump when he addressed the nation yesterday, warning that there was a “painful two weeks” coming as latest projections suggest as many as 240,000 Americans will die from coronavirus. Those projections hinge on social-distancing measures remaining in place, with some signs already emerging on the West Coast of their effectiveness, with California Governor Gavin Newsom saying they have given the state time to prepare for the worst. Globally, the death toll from the virus now stands at over 42,000, with 860,000 confirmed cases, according to data from Johns Hopkins University.
Bank shares are tumbling this morning after the British Prudential Regulation Authority wrote to lenders asking them to halt dividend payments. HSBC, Standard Chartered Plc, Royal Bank of Scotland Group Plc, Barclays Plc and Lloyds Banking Group Plc all cancelled outstanding payments and said there would be no dividends in 2020. Regulators in Europe are also pushing back against bonus payments to to senior staff.
Today marks the end of the agreed production limits by OPEC and its allies. Saudi Arabia has boosted output to more than 12 million barrels a day, while other major producers such as Iraq also plan increases. Russia, however does not intend to ramp up production, according to a government official. The moves come as the oil market faces something close to a wipeout in demand, meaning the next month could be a game-changer for the industry. In trading this morning, a barrel of West Texas Intermediate for May delivery held close to $20 a barrel.
The new quarter is not starting on a hopeful note for global stocks with gauges around the world firmly in negative territory. Overnight the MSCI Asia Pacific Index dropped 2.1% while Japan’s Topix closed 3.7% lower after the country’s health minister said the coronavirus outbreak there is getting more severe. In Europe, the Stoxx 600 Index was down 2.5% at 5:50 a.m. Eastern Time with banks the hardest hit. S&P 500 futures pointed to more red at the open, the 10-year Treasury yield was at 0.616% and gold was recovering some ground.
With all investors taking a very keen interest in the fallout from the virus for the U.S. economy, today’s ADP employment change number for March — expected to come in at minus 150,000 — at 8:15 a.m. will be closely watched. U.S. manufacturing PMI is at 9:45 a.m., with ISM manufacturing at 10:00 a.m. Already frazzled oil traders have U.S. inventories data at 10:30 a.m., while auto sales numbers are expected to show a sizable decline. Boston Fed President Eric Rosengren will hold a virtual talk on the effects of the virus at 2:00 p.m.