GLOBAL NEWS:
The phased reopening of U.S. business and social life gained traction on Monday with more Americans emerging from coronavirus lockdowns and financial markets boosted by promising early results from the first U.S. vaccine trial in humans. News of a possible vaccine breakthrough was somewhat overshadowed by President Donald Trump’s surprise announcement hours later that he is taking hydroxychloroquine as a COVID-19 preventive treatment, contrary to medical warnings about such use of the anti-malaria drug. The disclosure came during Trump’s White House meeting with restaurant executives. Just 10 days ago the White House confirmed that Vice President Mike Pence’s press secretary had tested positive for the coronavirus, 24 hours after Trump’s military valet was diagnosed. Trump initially promoted hydroxychloroquine in April as a potential COVID-19 treatment based on a positive report about its use against the virus. But subsequent studies have found it to be ineffective, and the Food and Drug Administration has warned of the potential for serious side effects associated with hydroxychloroquine and an older, related drug, chloroquine.
Asian shares jumped on Tuesday and oil extended gains on optimism the global economy would recover quickly following a successful early-stage trial of a coronavirus vaccine, while the euro hovered near a two-week top. MSCI’s broadest index of Asia Pacific shares outside of Japan .MIAPJ0000PUS rose 1.5% to two-week highs. Australia's benchmark index and Hong Kong's Hang Sang were the lead gainers, up 2% each, South Korea added 1.8% while China's blue-chip index climbed 0.8%. Japan's Nikkei added 2% to the highest since early March. On Wall Street overnight, the benchmark S&P 500 posted its biggest one-day percentage gain in almost six weeks, gaining 3.15%. The Dow Jones Industrial Average rose 3.85% and the Nasdaq Composite added 2.44%. E-minis for the S&P 500 were off 0.2% in Asian trading. The vaccine optimism sent treasury yields surging overnight as investors dumped bonds, while gold came off its peak. Spot prices were last up 0.4% $1,739.2 an ounce. There was good news in Europe too, after France and Germany called for the creation of a 500 billion euro ($543 billion) Recovery Fund able to offer grants to the countries and regions hardest hit by the coronavirus crisis. The euro hovered near a two-week top at $1.0907. The British pound was up 0.1% at $1.2201. The risk sensitive Australian and New Zealand dollars were also up slightly. The safe haven yen eased on the greenback to be last at 107.40 per dollar. Oil prices jumped to their highest in over two months, as the easing of global lockdowns boosted hopes of economic activity and as producers appeared to be following through with planned production cuts. Brent crude was last up 1.24%, or 43 cents, at $35.21. U.S. crude jumped 2.7%, or 87 cents, to $32.69.
Economic conditions in Japan will likely stay tough in the current quarter, Finance Minister Taro Aso said on Tuesday, also promising that the government would ensure support for employment and help firms stay in business. The world’s third-largest economy fell into recession for the first time in 4-1/2 years in the quarter through March, data on Monday showed, putting it on course for its deepest postwar slump as the coronavirus crisis wrecks businesses and consumers. The government also pushed back its schedule for working out budget requests and looked to adopt its mid-year policy guidelines at a later-than-usual time as it focused on responses to the coronavirus. Speaking to reporters after a cabinet meeting, Aso said the finance ministry will push back the deadline for budget requests to Sept. 30. Ministries usually make budget requests around August. Economy Minister Yasutoshi Nishimura at a separate news conference said the government aims to approve its mid-year policy guidelines around mid-July. The government usually approves the guidelines some time in June. It then uses the guidelines to draw up its annual economic growth strategy, in which it lays out its priorities for fiscal spending and economic policy.
Indian telecom operator Bharti Airtel Ltd reported a loss for the fourth quarter on Monday, as it set aside 56.42 billion Indian rupees for one-time spectrum charges. The company, India’s third-largest telecom operator by subscribers, posted a loss of 52.37 billion rupees for the three months ended March 31, compared with a profit of 1.07 billion rupees a year earlier. However, the telco’s quarterly average revenue per user at its India mobile services business rose 25% from a year earlier to 154 rupees. Indian telecom firms raised tariffs late last year after the Supreme Court upheld a demand by India’s telecoms department that wireless carriers pay 920 billion Indian rupees in overdue levies and interest. The company said total revenue rose 15% to 237.23 billion rupees for the quarter ended March 31. Bharti Airtel added it had seen an increase in data traffic during the COVID-19 pandemic, which prompted India’s government to impose a strict lockdown since late March.
Oil prices rose on Tuesday, extending gains for a fourth straight session, amid signs that producers are cutting output as promised just as demand picks up, stoked by more countries easing out of curbs imposed to counter the coronavirus pandemic. Brent crude climbed $0.85, or 2.4%, to $35.66 a barrel by 0033 GMT, after touching its highest since April 9. U.S. West Texas Intermediate crude was up $1.30, or 4.1%, at $33.12 a barrel, after hitting its highest since March 16. The June WTI contract expires on Tuesday, but there was little sign of a repeat of the historic plunge below zero seen a month ago on the eve of the May contract’s expiry amid signs that demand for crude and derived fuels is recovering from its nadir. The market was also boosted by signs that output cuts agreed by the Organization of the Petroleum Exporting Countries and others including Russia, a group known as OPEC+, are being implemented on the ground. OPEC+ has cut its oil exports sharply in the first half of May, companies that track the shipments said, suggesting a strong start in complying with a new production cut agreement. “Investors’ sentiment has improved as OPEC+ are apparently slashing output as they promised for this month, with more voluntary cuts expected in June,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities. In further support for prices, U.S. production is also falling, with crude output from seven major shale formations expected to fall by a record 197,000 barrels per day in June to 7.822 million barrels per day. That would be the lowest since August 2018, according to the U.S. Energy Information Administration.