GLOBAL NEWS:
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Virus Update
U.S. cases increased 2.3% in the past 24 hours, below the one-week daily average. Gilead Sciences plans to get its drug remdesivir to patients within days after getting U.S. backing for emergency use. New York added the fewest new deaths in more than a month as hospitalizations declined. Russia reported more than 10,000 new cases, the highest number of the outbreak. The daily toll fell in the U.K. and Italy as leaders navigate reopening business without sparking new infections. Spain recorded the fewest deaths in more than six weeks. Meanwhile, the U.S. Secretary of State Michael Pompeo said “enormous evidence” shows the novel coronavirus outbreak began in a laboratory in Wuhan, China. And doctors debate the arrival time of a Covid-19 vaccine.
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Market Open
Currency markets saw muted moves in early trading on Monday, though sentiment remained fragile after a rough start to the month for risk assets. The New Zealand dollar slipped along with the pound and euro, though moves for most major currency pairs were subdued. Trading volumes may be light due to the Japan holiday and Treasuries won’t trade until the London open. Equities traders will be watching the open for S&P 500 futures after global stocks posted a more than 2% slide on Friday. China is also shut for a holiday. Meanwhile, the first full trading week of May could be a test for emerging markets.
The Reserve Bank is expected to maintain its three-year yield target at 0.25% and the cash rate at the same level Tuesday. Governor Philip Lowe’s post-meeting statement is likely to hint at the economic scenarios to be outlined in Friday’s quarterly forecast update. The RBA skipped purchasing bonds in the secondary market on Thursday, the first time since announcing its version of yield curve control six weeks ago, having acquired about A$50 billion ($32.3 billion) of federal and state government securities across a range of maturities. Its buying spree has seen yields on three-year Australian government bonds converging with the target. Governments worldwide have deployed more than $8 trillion to fight the economic fallout from the coronavirus pandemic. In the months and years ahead, nations are going to flood bond markets to raise the cash necessary to finance those programs.
Gold rose on Friday as dismal data from the United States underscored the deep economic impact of the coronavirus, but moves by some countries to ease tough containment measures kept bullion on track for its worst week in a month and a half. Spot gold climbed about 0.5% to $1,689.14 per ounce by 0248 GMT, paring some losses from a near 2% drop on Thursday. U.S. gold futures gained 0.1% to $1,695.00. “The main driver of rising gold prices is the weak labour market outcome in the United States. This suggests continued fiscal and monetary support, which is broadly supportive of gold,” said National Australia Bank economist John Sharma.The bleak data came despite elaborate stimulus measure from the U.S. government and the Federal Reserve, which retained its benchmark interest rate at near zero. Bullion tends to benefit from widespread stimulus measures as it is often seen as a hedge against inflation and currency debasement. Gold, however, was down about 2.2% for the week, its biggest drop since mid-March. Palladium slipped 0.1% to $1,958.90 per ounce and was on track to post its fifth straight weekly decline. Platinum dipped 0.3% to $769.62 per ounce, while silver eased 0.2% to $14.98.
Oil prices jumped on Friday, extending the previous session’s gains, buoyed by a lower-than-expected gain in U.S. crude inventories and the start of output cuts in a bid to offset a slump in fuel demand triggered by the coronavirus pandemic. Brent crude for July delivery, which started trading on Friday as the new front-month contract, was up $1.10, or 4.2%, at $27.58 a barrel by 0013 GMT. Brent gained 12% on Thursday. U.S. crude for June delivery climbed $1.37, or 7.3%, to $20.21 a barrel, having gained 25% in the previous session. This is a second straight week of inventory and product demand figures suggesting a bottoming of the U.S. market. U.S. Energy Information Administration data showed crude inventories rose by 9 million barrels last week to 527.6 million barrels, less than the 10.6 million-barrel rise analysts had forecast in a Reuters poll. The other significant support factor on Friday was the official start of output cuts agreed between the Organization of the Petroleum Exporting Countries and other major producers like Russia - a grouping known as OPEC+ - to counter sliding demand. The OPEC+ deal covers a cut in production of nearly 10 million barrels per day (bpd), a record level. That, nevertheless, falls well short of the roughly 30 million bpd of demand that has evaporated amid the coronavirus pandemic as much of the world’s population remains under some form of economic and social lockdown.