GLOBAL NEWS:
Wall Street tumbled on Monday after U.S. crude futures turned negative for the first time ever, with traders forced to pay to unload crude as the May contract expired during a global economic slump unleashed by the coronavirus outbreak. The S&P energy index .SPNY tumbled 3.7% after the front-month May U.S. West Texas Intermediate (WTI) contract CLc1 actually turned negative, with sellers offering $37.63 a barrel to any traders willing to take it. With billions of people staying home around the world due to the coronavirus, physical demand for crude has dried up. Helped by a $2 trillion U.S. government package to stimulate the economy, and by bets that the virus was nearing a peak in the United States, the S&P 500 has climbed over 25% from its March low. The benchmark index remains almost 17% below its February record high, and analysts have warned of a deep economic slump from the halt in business activity and millions of layoffs.
Oil prices rebounded on Tuesday, with U.S. crude turning positive after trading below $0 for the first time ever, but gains were capped amid unresolved concerns about how the market can cope with fuel demand decimated by the coronavirus pandemic. U.S. West Texas Intermediate crude for May delivery was up $38.73 at $1.10 a barrel by 0117 GMT after settling down at a discount of $37.63 a barrel in the previous session. The May contract expires on Tuesday, while the June contract, which is more actively traded, jumped $1.72 cents, or 8.4%, to $22.15 a barrel. Global benchmark Brent crude for June delivery was up 49 cents, or 1.9%, at $26.06 per barrel. “Demand destruction from COVID-19 will see a slower expected reopening of the U.S. economy,” said Edward Moya, senior market analyst at broker OANDA, predicting a weak period for oil prices. “The WTI crude June contract was able to hold the $20 a barrel level and is seeing a modest gain following the painful rollover of the May contract.” Oil prices have skidded as travel restrictions and lockdowns to contain the spread of the coronavirus curbed global fuel use, with demand down 30% worldwide. That has resulted in growing crude stockpiles with storage space becoming harder to find. Faced with the situation, the Organization of the Petroleum Exporting Countries and its allies including Russia, a grouping known as OPEC+, have agreed to cut output by 9.7 million barrels per day. But that will not take place before May, and the size of the cut is not viewed as big enough to restore market balance. Meanwhile, U.S. crude inventories were expected to rise by about 16.1 million barrels in the week to April 17 after posting the biggest one-week build in history, according to five analysts polled by Reuters. Analysts expected gasoline stocks to rise by 3.7 million barrels last week.
China’s central bank is conducting tests of a digital yuan payment system in four cities across the country, it told Reuters on Tuesday. The People’s Bank of China responded to Reuters’ queries following reports in local media last week that it was pushing forward with a digital currency application, which had lifted digital-currency related stocks. The digital currency institute of the PBOC said it was implementing internal closed trials of the central bank’s DC/EP electronic payment system in the four cities and intends to pilot the system at future Winter Olympics venues. The cities are Shenzhen in southern Guangdong province, Suzhou in eastern Jiangsu province, Xiongan new economic zone near Beijing and Chengdu, capital of southwestern Sichuan province. It said the DC/EP system remains in a period of research and development, and that the pilots do not mean the PBOC has officially issued digital yuan. The tests will not affect yuan issuance, circulation or financial markets outside of the testing environment, it added.
Indian shares dropped sharply on Tuesday, tracking losses in global markets, following a historic overnight plunge in U.S. crude oil that amplified the blow to the world economy from the coronavirus-led lockdowns. The NSE Nifty 50 index fell 2.85% to 8,999.95 by 0355 GMT, while the benchmark S&P BSE Sensex was down 2.84% at 30,747.13. Oil-to-retail conglomerate Reliance Industries Ltd was the biggest drag on the indexes, falling as much as 3.5%. The losses were broad-based, with the Nifty Bank Index plunging 4.2%, its most since April 3. Private-sector lender ICICI Bank Ltd fell for the second straight day, tumbling 6.2%. West Texas Intermediate futures bounced back into positive territory on Tuesday after plunging below zero, but were still just $1.76 a barrel. MSCI’s broadest index of Asia-Pacific shares outside Japan fell half a percent, while the Dow Jones Industrial Average ended 2.44% lower and the S&P 500 lost 1.79% overnight.
Gold prices slipped on Tuesday, having risen as much as 1% in the previous session as the dollar firmed, although losses were capped by a fragile equities market. Spot gold eased 0.2% to $1,689.45 per ounce by 0031 GMT, while plummeting U.S. crude oil prices increased bullion’s safe-haven appeal on Monday. U.S. gold futures fell 0.4% to $1,704.60. The dollar was up 0.1% against key rivals, making gold costlier for investors holding other currencies. Asia shares were poised to track a Wall Street tumble after U.S. crude futures turned negative for the first time in history. The markets are much less confident about Europe and the United States getting back to business ahead of the summer, a Deutsche Bank investor survey showed on Monday.Gold prices are expected to consolidate below recent highs during 2020 and 2021 as increased demand from investors for the ‘safe haven’ asset is offset by dollar strength and weak retail consumption, a Reuters poll showed on Monday. Analysts and traders have raised their forecasts for palladium prices, predicting the metal will remain under-supplied even as the virus outbreak hammers auto makers, reducing demand. Palladium rose 0.5% to $2,175.04 an ounce, while platinum slipped 0.6% to $765.70 and silver fell 1.5% to $15.14.