GLOBAL NEWS:
Wall Street gained more than 1% on Monday at the onset of a hectic earnings week, as investors turned a hopeful eye toward several U.S. states that are relaxing shutdown restrictions put in place to curb the spread of the COVID-19 pandemic. All three major U.S. stock averages advanced, and are all now within 20% of their record closing highs reached in February, with the benchmark S&P 500 on track for its best month since 1987, after trillions of stimulus dollars helped U.S. equities claw back much of the ground lost since the coronavirus crisis brought the economy to a grinding halt. Several states have begun easing stay-at-home restrictions, in efforts to revive economies and get Americans back to work following crushing job losses. Economists expect first-quarter U.S. GDP to have shrunk at a 4% annualized rate when the Commerce Department releases its report on Wednesday.In afternoon trading, the Dow Jones Industrial Average rose 358.51 points, or 1.51%, to 24,133.78, the S&P 500 gained 41.74 points, or 1.47%, to 2,878.48 and the Nasdaq Composite added 95.64 points, or 1.11%, to 8,730.16. All 11 major sectors of the S&P 500 closed higher, with financials .SPSY, helped by rising U.S. Treasury yields, posting the largest gains. Analysts expect first-quarter S&P 500 earnings to have fallen 15% from last year, a dramatic reversal from the 6.3% year-on-year growth forecast at the start of the year, according to Refinitiv data. Tesla Inc jumped 10.1% and gave the Nasdaq its biggest boost after a report said the company was calling some workers back to its California vehicle-assembly plant next week. Crude oil prices, under pressure amid a supply glut and plunging demand, plummeted 23.3%.Volume on U.S. exchanges was 10.64 billion shares, compared with the 12.35 billion average over the last 20 trading days.
Australia’s Westpac Banking Corp on Tuesday said it expects to record pre-tax impairment provisions of A$2.24 billion for the first-half, largely due to the economic deterioration expected from the coronavirus outbreak. About A$1.6 billion of the impairment charges are predominantly related to COVID-19 impacts, the country’s second-largest lender said, while the remaining A$600 million relate to certain other individual provisions and net write-offs. The impairments are in addition to provisions of A$1.43 billion after tax the lender announced earlier this month, mostly for an expected fine over accusations it enabled millions of illegal payments including between known child sex offenders. After Westpac’s disclosure, two of the country’s “Big Four” lenders have now detailed a hit to upcoming earnings, with No. 3 lender National Australia Bank making an A$1.22 billion provision in late-April. Australian banks, already counting the cost of years of financial misconduct through fines and refunds, are now bracing for an expected surge in bad debts as customers seek loan and payment deferrals due to the economic downturn triggered by virus containment measures. It also includes an assessment of additional stress that could emerge in various industries as a result of the outbreak. Westpac is set to announce results for the six months ending March 31 and its decision on an interim dividend payment on May 4.
Germany has agreed to help airline Lufthansa with a rescue package worth about 9 billion euros in return for a blocking minority and one or two supervisory board mandates, Business Insider cited company sources as saying. The news outlet said representatives of the government and Germany’s flagship carrier had agreed on those key points on Monday but Lufthansa Chief Executive Carsten Spohr had not officially taken part in the discussions. It said Spohr wanted to formally seal the deal with Chancellor Angela Merkel and Finance Minister Olaf Scholz on Tuesday. Business Insider cited negotiating sources as saying it was unlikely the package would be re-opened at this stage. Last week Reuters reported people close to the matter as saying that Lufthansa aimed to finalise a state aid rescue package worth up to 10 billion euros this week after the coronavirus crisis forced it to ground almost all its planes. This month Spohr said Lufthansa would seek state aid in Austria, Belgium, Germany and Switzerland, citing cash burn at a rate of 1 million euros per hour, meaning that the airline’s 4 billion euro cash reserves will be inadequate. Politicians had said on Sunday that Germany’s ruling coalition was divided over whether the state should have a role in running Lufthansa in return for a rescue package.
India’s Reliance Industries Ltd will consider a rights issue at its board meeting on April 30, in what would be its first such issue in nearly three decades, the oil to retail conglomerate said in an exchange filing late on Monday. Reliance did not provide any details of the rights issue under consideration. Shares in the company rose as much as 1.8% in early trade following the announcement, later falling in line with the broader market. At 0455 GMT, the shares were trading down 2% while the Nifty share index was 0.1% lower. Promoters - as controlling stakeholders are called in India - hold a little over 50% of the company. Analysts said the potential for a rights issue is a positive development and reflects the confidence of management and their commitment to reducing Reliance’s net debt to zero by March 2021. “It reflects promoter’s unflinching faith in the medium to long term prospects of various businesses,” said Ajay Bodke, chief executive at Prabhudas Lilladher, a portfolio management service company. “This is an apt opportunity for current shareholders to participate in the likely value unlocking of various businesses over the next couple of years.”
Gold fell on Tuesday as risk appetite was boosted by plans of some countries to ease coronavirus curbs in a phased manner, but prices held above the key $1,700 per ounce level amid hopes for more stimulus to cushion the fallout from the pandemic. Spot gold eased 0.7% to $1,702.09 per ounce by 0139 GMT. U.S. gold futures fell 0.3% to $1,719.20 per ounce. Asian stocks were set for gains after a strong Wall Street session as easing lockdown restrictions by some countries and U.S. states buoyed sentiment, despite another decline in oil prices. More U.S. states with fewer cases eased restrictions aimed at controlling the spread of the virus that have led to a record 26.5 million Americans filing for unemployment benefits since mid-March. Gold tends to benefit from widespread stimulus measures as it is often seen as a hedge against inflation and currency debasement. China’s net gold imports via Hong Kong in March nearly trebled from the previous month as the country began gradually easing coronavirus restrictions, but imports were still down 63% from last year as the pandemic choked demand, data showed. Gold loves a crisis, the old adage goes. And with prices up 13% this year to their highest since 2012 and many predicting further gains as investors search for safe places to put their money, it looks true for the coronavirus crisis so far. Palladium rose 0.6% to $1,937.16 an ounce, platinum was little changed at $758.08 per ounce and silver slipped 1.6% to $15.03 per ounce.
Oil prices slumped on Tuesday, extending the previous session’s slide, on worries about limited capacity to store crude worldwide and expectations that fuel demand may only recover slowly as coronavirus pandemic restrictions are gradually eased. U.S. West Texas Intermediate (WTI) crude futures skidded by as much as 16% and were off 14.7%, or $1.88 cents, at $10.90 a barrel as of 0158 GMT. WTI plunged 25% on Monday. Brent crude futures fell to a low of $18.97 and were last down 4.1%, or 82 cents, at $19.17 a barrel. The benchmark slid 6.8% on Monday, and the contract for June delivery expires on April 30. Strategists said part of the WTI decline is due to retail investment vehicles like exchange-traded funds selling out of the front-month June contract and buying into months later in the year to avert massive losses like last week, when WTI plummeted below zero. The main concern is that there is nowhere to store all the oil that is not being consumed due to the drop in global economic activity amid restrictions imposed around the world to curb the spread of the new coronavirus. Even with the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia having agreed record output cuts of nearly 10 million barrels per day (bpd) from May 1, that volume is not nearly enough to offset a drop in demand of around 30 million bpd due to COVID-19 restrictions. As a result of the collapse in demand, global storage onshore is estimated to be about 85% full as of last week, according to data from consultancy Kpler. In a sign of the energy industry’s desperation for places to store petroleum, oil traders are resorting to hiring expensive U.S. vessels to store gasoline or ship fuel overseas, shipping sources said. “It is hard to see sentiment turning convincingly positive for oil until there’s evidence of OPEC cuts and demand improvement slowing or reversing the global inventory build,” said AxiCorp’s chief global market strategist, Stephen Innes.