By Lorcan Roche Kelly
The coronavirus shutdown in China spurred the first economic contraction in decades at minus 6.8% in the first three months of 2020 from a year ago. With many of the restrictions there now lifted, attention is turning to how other countries will start to get back on track. President Donald Trump yesterday unveiled guidelines on reopening the U.S. economy which could see an end to many of the current social distancing practices within four weeks. The plan from the White House leaves the timing of measures to state governors and businesses, a reversal of the president’s previous assertion that he had total authority to make such a decision.
While scientists around the world are hard at work on a vaccine, there are signs that a treatment for those worst hit by the virus may be emerging. A report on a Chicago trial of Gilead Sciences Inc.’s drug remdesivir — previously used to treat Ebola patients — pointed to promising signs, with patients showing “rapid recoveries in fever and respiratory symptoms.” Shares in Gilead are more than 10% higher in pre-market trading.
There seems to be no end in sight to the bad news for the crude market. Less than a week after the historic agreement to cut production, OPEC predicted that demand for its crude will drop to the lowest level since early 1989. Earlier this week, the International Energy Agency predicted the world may soon run out of places to store the commodity as demand evaporates. West Texas Intermediate for May delivery is trading close to $18 a barrel this morning, with cargoes of Brent trading at steep discounts, according to S&P Global Platts.
Signs of a path towards reopening the world’s largest economy and the possibility of an effective treatment are giving risk assets a boost this morning. Overnight, the MSCI Asia Pacific Index added 1.9%, pushing the gauge to the cusp of a bull market, while Japan’s Topix index closed 1.4% higher. In Europe, the Stoxx 600 Index had rallied 3.1% by 5:50 a.m. Eastern Time with every sector, including oil and gas, posting gains. S&P 500 futures pointed to a pop at the open, the 10-year Treasury yield was at 0.64% and gold was dropped.
The Conference Board U.S. Leading Index for March is expected to show a record decline when it is published at 10:00 a.m. Federal Reserve Bank of St. Louis President James Bullard speaks this morning. The Baker Hughes rig count is expected to drop below 600 for the first time since 2016 when it is released at 1:00 p.m. Procter & Gamble Co., State Street Corp. and oil-services giant Schlumberger Ltd. are among companies reporting earnings.