GLOBAL NEWS:
The White House has begun informal talks with Republicans and Democrats in Congress about what to include in another round of coronavirus relief legislation, officials said on Sunday, while predicting further U.S. jobs losses in the coming months. Officials in President Donald Trump’s administration, including Treasury Secretary Steven Mnuchin and White House economic adviser Larry Kudlow, said they were holding discussions with lawmakers on issues including potential aid to states whose finances have been devastated by the pandemic. Another White House economic adviser, Kevin Hassett, said future legislation could include food aid to help Americans struggling with hunger amid widespread job losses that have ruined the finances of many people. It also could include broadband access for those who lack it, Hassett added. While Democrats, who control the House of Representatives, are moving to unveil new legislation as early as this week, the White House signaled it is in no hurry to pass another relief bill. Since early March, Congress has passed bills allocating $3 trillion to combat the pandemic, including taxpayer money for individuals and companies to blunt an economic impact that includes an unemployment rate to 14.7% in April after U.S. job losses unseen since the Great Depression of the 1930s. On CBS’s “Face the Nation,” Hassett said the U.S. unemployment rate could rise to somewhere “north of 20 percent” in May or June before the economy moves into what administration officials have said will be a robust recovery in late 2020. The April unemployment rate announced by the Labor Department undercounts some out-of-work Americans, economists say. Asked if the country could now be facing a “real” unemployment rate of close to 25 percent, Mnuchin replied: “We could be.” Such a rate also includes people who have lost jobs and are not actively seeking employment and people considered underemployed.
China’s central bank said it lowered interest rates on its standing lending facility (SLF) in April, catching up with similar reductions in other liquidity tools as part of Beijing’s efforts to support the coronavirus-hit economy. In the first-quarter monetary policy report published on Sunday, the People’s Bank of China said it had cut SLF rates by 30 basis points on April 10, bringing borrowing costs on overnight, seven-day and one-month loans to 3.05%, 3.2%, 3.55%, respectively. The PBOC has been rolling out a slew of measures to backstop the economy since the coronavirus outbreak, cutting key policy rates and reducing the amount banks must hold as reserves for the dual purpose of boosting financial system liquidity and lowering financing costs. In Sunday’s report, the PBOC said it will step up support for the economy, and dropped its long-standing vow to refrain from “flood-like” stimulus in a move that suggested authorities were prioritising growth and job creation as China struggles with its worst slump in decades.Premier Li Keqiang told a recent cabinet meeting that the government will aims to complete issuance of another 1.0 trillion yuan local government special bonds by end-May. The central bank has lowered one-year medium-term lending facility loans to financial institution twice this year by a total of 30 basis points to 2.95%, the lowest since the liquidity tool was introduced in September 2014. SLF loans have a shorter maturity and differs from the MLF, which the PBOC uses to manage longer-term liquidity in the banking system and guides the lending benchmark loan prime rate.
Japan will compile a second supplementary budget for the current fiscal year to fund new measures to combat the economic fallout from the coronavirus pandemic, the Nikkei newspaper reported on Monday. The package would aim to cushion the blow to the world’s third-largest economy, which is on the cusp of deep recession amid a plunge in global demand and a local state of emergency that has been extended through to the end of May. The new measures will include aid to companies struggling to pay rent, support for students who have lost part-time jobs, and more subsidies to companies hit by slumping sales, the paper said. The government plans to pass the supplementary budget through the current parliamentary session that runs through June 17, the paper said, without citing sources. Japan compiled a record $1.1 trillion economic stimulus package in April that focused on cash payouts to households and loans to small businesses hurt by the pandemic. Ruling coalition lawmakers have ramped up calls for more assistance, as the government’s decision to extend a state of emergency heightens risks of more bankruptcies and job losses. Japan’s economy likely shrank for a second straight quarter in the first three months of this year, a Reuters poll showed, meeting the technical definition of a recession as the pandemic crushed consumption and business activity.
Samik Sarkar was managing to eke a profit out of his online apparel store before the coronavirus crisis hit India, forcing the 36-year old to reinvent his business overnight. The rapid global economic slowdown, India’s coronavirus lockdown of 1.3 billion people and an exodus of venture capital are testing a start-up community that has quickly become one of the world’s biggest, raising a record $14.9 billion last year. The success of Indian e-tailer Flipkart, sold for $16 billion to Walmart in 2018, helped draw in billions of dollars in funding from global venture capital firms, while U.S. and Chinese tech giants stalked promising prospects. But in just a few months much of that cash has vanished, with venture capital and private equity investment in India expected to fall by 45%-60% this year, EY estimates. Five venture capitalists told Reuters that only a few of the best companies from their existing portfolios would be able to get further funding, while most new ventures will likely be locked out for the foreseeable future. This rapid turnaround has left scores of Indian start-ups which had been plotting expansion and fundraising considering anything and everything to keep themselves from going under. Data from Tracxn, which monitors start-up investments and financials, shows there were 1,406 funded start-ups in India in 2019, compared with 351 in 2008. The funding freeze has been compounded by India’s move in April to step up scrutiny of investments from overseas, a move seen by some analysts as a thinly disguised deterrent to takeovers by Chinese companies, which have been big investors in India’s tech industry. And with SoftBank, another major funder of Indian start-ups, facing setbacks elsewhere there is little relief expected from the Japanese technology backer.
Gold prices rose on Monday, holding above the key $1,700 per ounce support level, as a new wave of coronavirus infections in some countries raised expectations of further stimulus measures and lower interest rates. Spot gold gained 0.5% to $1,708.75 per ounce by 0325 GMT, having lost about 1% in the previous session. U.S. gold futures eased 0.1% to $1,711.70. “People have bought the dip. Even in the best of circumstances, we are still in an environment where rates are going to remain very low, fiscal policies are going to remain very accommodative and inflation is going to be high,” said IG Markets analyst Kyle Rodda. Gold is poised to move higher in the longer term and investors are trying to get their hands on the metal before it rockets higher, he said, adding that there was a lot of technical support around the $1,700 level. Gains in bullion were limited, however, as the dollar firmed and Asian shares rose, with investors looking ahead to more countries restarting their economies, even as some reported an unwelcome pickup in new coronavirus cases. Chinese authorities reported on Sunday what could be the beginning of a new wave of virus cases in northeast China, while South Korea warned of a second wave of new infections. Highlighting the impact of the pandemic, the U.S. economy shed a record 20.5 million jobs in April, a Labour Department report showed on Friday. On the U.S.-China trade front, the International Monetary Fund on Friday warned Washington and Beijing against rekindling a tariff war that could weaken recovery from the pandemic, while signalling a possible downward revision of global economic forecasts. Among other metals, palladium gained 1.1% to $1,902.46 an ounce, platinum rose 0.7% to $770.20 and silver climbed 0.4% at $15.51.
Oil prices slid nearly $1 a barrel on Monday as concern over a persistent glut and economic gloom caused by the coronavirus pandemic combined to cancel out support from supply cuts at some of the world’s top producers. Brent crude futures were down 73 cents, or 2.4%, at $30.24 a barrel by 0114 GMT, while U.S. West Texas Intermediate crude futures fell 81 cents, or 3.3%, to $23.93 a barrel. Both benchmarks have notched gains over the past two weeks as countries have eased business and social lockdowns imposed to cope with the coronavirus and fuel demand has rebounded modestly. Oil production worldwide is also declining. Global oil demand has plummeted by about 30% as the coronavirus pandemic curtailed movement across the world, building up inventories globally. “Oil companies are dealing with a plethora of challenges due to the sudden decline in demand,” GlobalData oil and gas analyst Haseeb Ahmed said in a note. Fears that the United States is running out of storage space triggered WTI prices crashing into negative territory last month, prompting some U.S. producers to slash output. In a sign of that impact, the number of operating oil and gas rigs in the world’s largest oil producer fell to 374 in the week to May 8, a record low according to data released on Friday from energy services firm Baker Hughes Co going back to 1940.