GLOBAL NEWS:
The head of the World Health Organization said on Wednesday he regrets U.S. President Donald Trump’s decision to pull funding for the agency, but that now is the time for the world to unite in its fight against the new coronavirus. Trump’s move prompted condemnation from world leaders as global coronavirus infections passed the 2 million mark. The United States is the world’s worst-affected country and its coronavirus death toll topped 30,000 on Wednesday, according to a Reuters tally. The fatalities have doubled in just a week and set a record single-day increase for the second day in a row. Trump said the data suggests the nation has passed the peak of new coronavirus infections and that he will announce guidelines for reopening the economy on Thursday. WHO Director General Tedros Adhanom Ghebreyesus told a news conference that the United States “has been a long-standing and generous friend of the WHO, and we hope it will continue to be so.” Global health campaigner and donor Bill Gates tweeted that “Halting funding for the World Health Organization during a world health crisis is as dangerous as it sounds. The world needs WHO now more than ever.” There was a sign of global unity among the Group of 20 major economies, including the United States, which agreed to suspend debt service payments for the world’s poorest countries from May 1 until the end of the year. Meeting host Saudi Arabia said this would free up more than $20 billion for them to spend on their health systems.
Most Japanese corporations were disappointed by the government’s $1 trillion stimulus plan to mitigate the economic fallout from the coronavirus outbreak, saying it is insufficient, and many complained it was too little, too late, a Reuters poll showed. Prime Minister Shinzo Abe last week declared a state of emergency for Tokyo and six other prefectures, and rolled out an economic stimulus package equal to 20% of economic output. The Reuters Corporate Survey found 46% of firms felt the government’s stimulus was somewhat not enough and 29% deemed it quite insufficient, keeping Abe’s government under pressure to top-up last week’s spending package. While 5% said it was too much, just 21% said it was sufficient and appropriate. Analysts say the actual size of the package was exaggerated as it included non-spending items such as loans and tax payment delay. Excluding such factors, the new stimulus was much smaller. Already, some ruling party lawmakers are calling for even bigger spending, which would further strain the industrial world’s worst debt burden at more than twice the size of its economy. An overwhelming majority of firms said they would keep employment and base salaries at current levels, while many of those who were unsatisfied with the government’s stimulus called for more support for financing and hiring, the survey showed. The Reuters Corporate Survey, conducted from April 1-13 for Reuters by Nikkei Research, canvassed 499 big and mid-size non-financial companies. Roughly 230 answered questions on the virus impact on condition of anonymity to express opinions freely.
Indian stocks fell on Thursday as IT shares took a beating after Wipro Ltd flagged a hit from the coronavirus pandemic, with worrying data from the United States and grim economic outlook for Asia further weighing on investor sentiment. The NSE Nifty 50 index was down 0.3% at 8,898.25 by 0507 GMT, while the benchmark S&P BSE Sensex slipped 0.36% to 30,271.27. Both indexes fell as much as 1.2% in early trade. The rupee declined in line with emerging market peers amid worries of a steep global recession due to the pandemic and hit a record low of 76.82 against the dollar. Wipro shares fell as much as 3.5% on Thursday and rival Infosys Ltd slid 5.6%, while Tata Consultancy Services Ltd dropped 3.5% ahead of its earnings due later in the day, dragging the Nifty IT index 3.9% lower. Markets are already expecting that guidance from Indian corporates will be very weak this quarter, but the Nifty has shot up to 9,200 levels, and we may be seeing some profit-booking. Asian stock markets were also under pressure after data showed U.S. retail sales fell the most on record last month and manufacturing output fell by the most in 74 years, raising fears of a deep recession. Gains in energy and construction majors limited the losses in Mumbai trading, with Reliance Industries Ltd climbing as much as 3% and Larsen & Toubro Ltd up 4.1%. Miner Vedanta Ltd jumped 7.3% to a near five-week top and was the top percentage gainer on the Nifty 50.
Asia’s economic growth this year will grind to a halt for the first time in 60 years, as the coronavirus crisis takes an “unprecedented” toll on the region’s service sector and major export destinations, the International Monetary Fund said on Thursday. Policymakers must offer targeted support to households and firms hardest-hit by travel bans, social distancing policies and other measures aimed at containing the pandemic, said Changyong Rhee, director of the IMF’s Asia and Pacific Department. Asia’s economy is likely to suffer zero growth this year for the first time in 60 years, the IMF said in a report on the Asia-Pacific region released on Thursday. While Asia is set to fare better than other regions suffering economic contractions, the projection is worse than the 4.7% average growth rates throughout the global financial crisis, and the 1.3% increase during the Asian financial crisis in the late 1990s, the IMF said. The IMF expects a 7.6% expansion in Asian economic growth next year on the assumption that containment policies succeed, but added the outlook was highly uncertain. China’s economy is expected to grow by 1.2% this year, down from 6% growth in the IMF’s January forecast, on weak exports and losses in domestic activity due to social distancing steps. The world’s second-largest economy is expected to see a rebound in activity later this year, with growth to bounce back to 9.2% next year, the IMF said. Rhee warned that direct cash transfers to citizens, part of the U.S. stimulus package, may not be the best policy for many Asian countries which should focus on preventing small firms from going under to stop a sharp increase in unemployment. Emerging economies in the region should tap bilateral and multilateral swap lines, seek financial support from multilateral institutions, and use capital controls as needed to battle any disruptive capital outflows caused by the pandemic, the IMF said.
Gold prices edged lower on Thursday as the dollar firmed and investors booked profits, but losses were capped as dour retail sales and manufacturing data out of the United States heightened fears of a steep global recession due to the new coronavirus. Spot gold slipped 0.1% to $1,714.55 per ounce by 0302 GMT. The metal had settled 0.7% lower on Wednesday, snapping four straight sessions of gains. U.S. gold futures rose 0.2% to $1,743.30 per ounce. If you look at the bigger picture, data is bad, which means you get another few more rounds of quantitative easing, and central banks would definitely keep interest rates low in this weak environment. U.S. retail sales suffered a record drop in March and output at factories declined by the most since 1946, raising concerns that the economy contracted in the first quarter at its sharpest pace in decades as measures to control the spread of the virus weighed. World stock markets fell, while bonds and the dollar held on to hefty gains, after a coronavirus-driven plunge in U.S. retail sales and factory production and increasing gloomy economic outlooks for Asia. Indicative of investors’ appetite for gold, holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 0.4% to 1,021.69 tonnes on Wednesday. Palladium gained 1.6% to $2,214.48 an ounce, while silver slipped 0.7% to $15.36 per ounce and platinum fell 0.4% to $776.67 an ounce.
Oil edged higher on Thursday following sharp losses in the previous session on hopes that a big build-up in U.S. inventories may mean producers have little option but to deepen output cuts as the coronavirus pandemic ravages demand. With official data showing U.S. inventories surging the most on record, WTI fell on Wednesday to its lowest since February 2002, with Brent slumping more than 6%. Brent crude LCOc1 was up 36 cents, or 1.3%, at $28.05 a barrel by 0502 GMT. U.S. West Texas Intermediate (WTI) was up 10 cents, or 0.5%, at $19.97. Concerns about crumbling demand kept a lid on gains with both contracts having traded over 2.5% higher earlier in the session. Energy Information Administration data also showed large U.S. refined fuels stock builds despite refiners operating at 69% of capacity nationwide, the lowest since September 2008. The figures followed a report from the International Energy Agency that forecast oil demand would fall by 29 million barrels per day in April, to the lowest in 25 years, and just below 30% of global demand before the coronavirus outbreak. That number is well above production cuts in the pipeline. The Organization of the Petroleum Exporting Countries and allied producers including Russia, a grouping known OPEC+, have agreed to reduce output by 9.7 million bpd, while hoped-for cuts of another 10 million bpd from other countries including the United States could lower production by 20 million bpd. Some countries have also committed to increasing purchases of oil for their strategic stockpiles, but there are physical limits to how much oil can be bought.