GLOBAL NEWS:
The dollar nursed losses on Thursday after the U.S. Federal Reserve left the door open to more monetary easing and dampened expectations for a quick economic recovery from the coronavirus pandemic. The greenback was also weighed down as signs the pandemic is receding in other countries and reduced safe-haven demand for holding funds in dollars. Positive trial results for a drug to treat COVID-19 also boosted the appetite for riskier assets. The euro held steady before a European Central Bank meeting later on Thursday where policymakers are likely to expand debt purchases to include junk bonds and take other steps to ease conditions in credit markets. China’s currency hit a two-week high as data suggests the world’s second-largest economy is recovering from a steep decline in activity caused by the pandemic. More countries are taking steps to re-open their economies as coronavirus infections slow, giving some cause for optimism. The dollar traded at 106.72 yen in Asia on Thursday, close to a six-week low. Against the pound, the dollar stood at $1.2455, following a 0.3% decline on Wednesday. The greenback was little changed at 0.9748 Swiss franc. The euro was little changed at $1.0866 on Thursday. Against the pound, the common currency traded 87.26 pence. The Australian dollar traded at $0.6542 on Thursday, close to a seven-week high in a sign of improving risk sentiment among some investors. The New Zealand dollar also traded near a six-week high as economic activity returns following the end of one of the world's strictest lockdowns related to the coronavirus.
Factory activity in China expanded for a second straight month in April as more businesses resumed work from the coronavirus-led shutdowns, but a worsening slump in export orders pointed to a long road to recovery for the embattled economy. China’s official Purchasing Managers’ Index eased to 50.8 in April from 52 in March, China’s National Bureau of Statistics said on Thursday, but stayed above the neutral 50-point mark that separates growth from contraction on a monthly basis. That has left Chinese manufacturers with reduced export orders and a logistics logjam, as many exporters grapple with rising inventory, high costs and falling profits. Some have let workers go as part of the cost-cutting efforts. The survey’s sub-index of export orders dived to 33.5 in April from 46.4 in March with some factories even having their orders cancelled after reopening, said Zhao Qinghe, senior statistician at the NBS. Hobbled by the coronavirus, China’s economy shrank 6.8% in the first quarter from a year earlier, the first contraction since current quarterly records began alomost 30 years ago. The expansion in labour force also eased, with a sub-reading for employment falling slightly to 50.2 from 50.9. China’s urban jobless rate fell to 5.9% in March from 6.2% in February, suggesting the pain in the labour market is yet to be reflected in official numbers. The service sector, which accounts for 60% of China’s GDP, also saw an expansion in activity, with the official non-manufacturing PMI rising to 53.2 from 52.3 in March, a separate NBS survey showed.
Australia’s Newcrest Mining Ltd said on Thursday it planned to raise A$1 billion in a share issue to fund growth at the Fruta del Norte mine in Ecuador and other projects, increasing its exposure to rising gold prices. Australia’s biggest listed gold producer announced the rights issue, which would also fund development at its Red Chris operations in Canada and Haverion project in Western Australia, as it reported a 17% slump in third-quarter gold output, missing an analyst projection. Prices for gold struck the highest in more than seven years just shy of $1,750 an ounce in mid-April before easing to around $1,709 on Thursday amid a rush for the safe-haven metal due to the global coronavirus pandemic. In its share placement, Newcrest said it planned to issue about 39.1 million new shares at A$25.60 apiece, representing a 7% discount to Wednesday’s closing price of A$27.54. Shares were suspended from trading on the Australian stock exchange on Thursday. Some of the funds would be used to cover the cost of taking on financing arrangements that include gold pre-pay and stream facilities of Canada-based gold miner Lundin Gold’s Fruta del Norte mine, in which Newcrest already holds a 32% stake. Newcrest reported total gold production fell to 518,770 ounces in the three months ended March 31, from 623,124 ounces a year earlier, missing a UBS estimate of 562,000 ounces of gold output.
Indian shares rose more than 2% to a near seven-week high on Thursday, as global sentiment improved on promising early results from a COVID-19 treatment trial and on gains in heavyweight Reliance Industries ahead of its results. The NSE Nifty 50 index advanced 2.05% to 9,749.5 by 0350 GMT, while the benchmark S&P BSE Sensex was up 2.18% at 33,432.25. Both indexes were set for their fourth straight session of gains. Early results from U.S.-listed Gilead’s trial for its drug remdesivir showed it helped speed recovery from the illness caused by the coronavirus, pushing Wall Street and Asian stock markets higher. In Mumbai trading, conglomerate Reliance Industries Ltd rose 1.9% ahead of its quarterly results, while top private-sector lender HDFC Bank Ltd provided the biggest boost, rising as much as 3.5%. Shares of Glenmark Pharmaceuticals Ltd rose as much as 8.9% after the drugmaker said it got the Indian drug regulator’s nod to conduct clinical trials of antiviral drug favipiravir, seen as a potential treatment for COVID-19.
Gold edged lower on Thursday as risk appetite improved after positive trial results of an experimental COVID-19 treatment and a jump in oil prices, while the U.S. Federal Reserve’s vow to support the battered economy underpinned the safe-haven metal. Spot gold fell 0.1% to $1,708.85 per ounce by 0141 GMT. U.S. gold futures rose 0.7% to $1,725.00 per ounce. Asian equity markets were poised to gain, tracking Wall Street’s rally after positive trial results of an experimental COVID-19 treatment, Fed’s pledge to shore up the economy and a jump in oil prices. The dollar nursed losses after the Fed left the door open to more monetary easing and dampened expectations for a quick economic recovery from the coronavirus pandemic. The Bank of England faces the nearly impossible task of putting numbers on the scale of the coronavirus recession next week, when it must also decide whether to expand its already huge 645 billion pound bond-buying programme. Gold tends to benefit from widespread stimulus measures as it is often seen as a hedge against inflation and currency debasement. Factory activity in China expanded for a second straight month in April as more businesses resumed work from the coronavirus-led shutdowns, but a worsening slump in export orders pointed to a long road to recovery. Palladium rose 0.6% to $1,947.94 an ounce and platinum gained 0.2% to $776.32 per ounce, while silver fell 0.8% to $15.24 per ounce.
Oil prices rose on Thursday, building on big gains in the previous session on signs the U.S. crude glut is not growing as fast as expected and that gasoline demand battered by COVID-19 restrictions is starting to pick up. West Texas Intermediate crude CLc1 futures climbed to a high of $16.25 a barrel and were up 7.2%, or $1.08, at $16.14 at 0147 GMT. The U.S. benchmark surged 22% on Wednesday. Brent crude LCOc1 rose 3.9%, or 88 cents, to $23.42 a barrel in light trading, with the June contract expiring on Thursday. The contract hit a high of $23.65 in early trading, having posted a 10% gain on Wednesday. The May WTI contract plunged to historic lows below zero last week, but recovered the next day to expire at $10.01 a barrel. The June contract for the U.S. benchmark is now holding above $16 a barrel, and market strategists said while the market is likely to remain volatile, it may have found a floor. U.S. Energy Information Administration data on Wednesday showed U.S. crude oil inventories grew by 9 million barrels last week to 527.6 million barrels, well below the 10.6 million-barrel rise analysts polled by Reuters had expected. U.S. gasoline stockpiles notably fell by 3.7 million barrels from record highs the previous week, with a slight rise in fuel demand offseting a rebound in refinery output. The dual moves hinted of a pick-up in fuel demand that has been smashed by lockdowns to curb the novel coronavirus. Comments from the Trump administration raised hopes for more supply to exit the market and bolster the output cuts planned by the Organization of the Petroleum Exporting Countries and other major producers. Treasury Secretary Steven Mnuchin said the government was exploring options “to store another several hundred million barrels” of oil.