By Lorcan Roche Kelly
The growth in the number of coronavirus cases globally shows little sign of slowing with the reported total passing 1 million yesterday, and more than 53,000 deaths. Governments continue to implement new restrictions on movement in an effort to contain the spread, with Singapore closing most workplaces and France among the countries expected to announce an extension of current measures. Japan, Italy and Thailand are looking at increasing stimulus. ECB policymaker Olli Rehn called for a Europe-wide systemic solution to the crisis. The Asian Development Bank estimated the economic cost could be as high as $4.1 trillion, or 5% of world GDP.
It has been a crazy 24 hours in the oil market. Crude jumped over 40% in minutes yesterday after President Donald Trump tweeted that the world’s largest oil producing nations would agree to reduce output by about 10 million barrels or more. While the initial surge faded, with oil trading lower earlier this morning, that was again reversed by confirmation that OPEC+ will hold a meeting by video conference on Monday. A barrel of West Texas Intermediate for May delivery was trading close to $26 on renewed investor hopes that a deal could help reduce the global supply glut in the face of massive demand destruction caused by the pandemic.
Service and composite PMI readings from Europe this morning show the extreme effects on the economy from lockdowns across the region. The standout number was from Italy where a gauge of services activity came in at an astonishingly low 17.4, pointing to an economy which has basically ground to a halt. IHS Markit said that its monthly measure of services and manufacturing in the euro area points to an annualized contraction of about 10%, adding that there is “worse inevitably to come in the near future.” The measure for the U.K. service economy showed the steepest downturn since the survey began in 1996. PMI data for the U.S. economy is published at 9:45 a.m. Eastern Time.
The rapidness of the slowdown in U.S. employment means that for the moment weekly jobless claims has overtaken the monthly payrolls report as the go-to indicator for the health of the economy. Today’s jobs number will not reflect anything close to the 10 million that have registered as unemployed over the past two weeks, as the reference point for the new data was just before the full effect of business closures was starting to be felt. Even so, the median estimate from economists surveyed by Bloomberg is for minus 100,000 positions, a number which would end an amazing 113 consecutive months of payroll growth. The data is published at 8:30 a.m.
Investor sentiment continues to be dominated by the coronavirus outbreak, and with little sign of an improvement in the outlook in the short term, stocks remain under pressure. Overnight, the MSCI Asia Pacific slipped 0.7% while Japan’s Topix index closed 0.4% lower. In Europe, the Stoxx 600 Index was down 0.9% by 5:50 a.m. with all but one industry group losing ground. S&P 500 futures pointed to a loss at the open, the 10-year Treasury yield was at 0.606% and gold was broadly unchanged.