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Jens Peter Sørensen
Danske Bank A/S
Market movers today
There are not many important economic releases today; hence, market focus will continue to be on the virus developments, restrictions to contain the virus and policy responses to cope with the economic fallout.
In Europe, leaders are discussing ways to support the worst hit European countries, like Italy and Spain, ahead of the Eurogroup meeting. Proposals range from common debt issuances like Corona bonds to setting up an EU coronavirus support fund. Watch out for signals from European leaders, notably the German and French side.
In the US, weekly jobless claims are released. According to consensus among economists, the sad record from last week is about to be beaten, as economists expect another spike of 3.5m applications for unemployment benefit last week. In fact, given the timeliness of this report, it is now more interesting than the jobs report to be released tomorrow, see Research US: Why the March jobs report is already outdated, 1 April. We are likely to continue to see layoffs in coming weeks, while the US economy remains locked down and hence the jobs report for April will be extremely negative. If claims have risen by another 3.5m, the April jobs report will show a decline in employment of at least 7m but, unfortunately, probably more.
Overnight, the Chinese Caixin PMI service number for March is released. The official print earlier this week showed a rebound in the index to 52.3 from the dire print of 29.6 last month. However, market consensus is more wary predicting only a rebound to 39 for the Caixin number tomorrow morning.
In the oil market, the US administration is stepping up pressure on the Russians and Saudis to end the oil price war and signals from the two producers are important for oil markets near term.
Selected market news
The US equity market continues to be under pressure on the back of the negative effects from the coronavirus. There are more and more signs that the negative impact will be substantial. If that is the case, the issuance of US treasuries is set to increase significantly.
The Federal Reserve is easing some of the banking regulations in order to support the lending to households and corporates.
However, despite the losses seen in the US equity markets yesterday, there have only been modest losses in the Asian equity markets and US equity futures are up some 1.3-1.5% in Tokyo trading hours this morning.
The oil price is stabilising as expectations of a truce between Russia and Saudi Arabia are increasing.
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