Denmark and Austria present their Covid-19 'exit strategy'

Market movers today

The biggest event of the day is the Eurogroup video conference. The finance ministers are expected to discuss three proposals: (1) a common economic response to the COVID-19 hit countries, including using ESM facilities or creating a common debt instrument, (2) a pan-European guarantee fund to increase EIB's capacity to EUR200bn and (3) a EUR100bn backstop for employment protection schemes. We believe the end game will be some kind of debt mutualisation or rescue fund with transfers to the most heavily affected countries, but it will be a bumpy road. A press conference is planned at 20:00 CEST tonight.

PM Abe is set to announce a one month state of emergency today for seven Japanese prefectures including capital Tokyo due to a worrying increase in infections. The government is also finalising a significant fiscal package worth JPY108tn equal to 20% of GDP. Abe is set to approve the package at a cabinet meeting later today and hold a news conference at 12:00 CEST on the state of the emergency plans.

There are no major economic releases today.

Selected market news

Risk sentiment continued to be supported by further evidence that the virus has peaked in most countries in Europe. In Asia, most equity markets are rising following the significant increase in the US yesterday, where the S&P 500 rose 7%. On virus developments, the US has seen improvements in recent days in the growth of infections and deaths. The UK is behind the rest of Europe and yesterday Prime Minister Boris Johnson was taken into intensive care due to complications from his coronavirus infection. Risk sentiment in Asia was also boosted by better-than-expected reporting by Samsung, the Korean chip maker, as COVID-19 increased chip orders from datacentres helping to connect millions of people stuck at home globally.

As the coronavirus is increasingly getting under control in Europe, countries are starting to present their 'exit strategy' from the strict lockdown measures. Yesterday the Danish Prime Minister announced that she expects to open day care and schools up to 5th grade from 15 April, but that all restrictions on businesses and travel will remain in place until at least 10 May. More employees will be allowed back at the workplace, but not all. This opening will help businesses suffering from lack of labour, but those still shut down represent around 10% of total employment, so the opening will far from restore the economy. If most of the remainder is opened from 11 May, we could still reach our optimistic forecast of -2.5% GDP growth in 2020.

In Austria, Chancellor Sebastian Kurz also introduced the country's 'exit strategy' yesterday. From 14 April, small shops will be allowed to reopen as well as state parks but with tight entry controls. From 1 May, all shops, shopping centres and hairdressers will be allowed to open. Schools are also expected to reopen by the start of May. Restaurants, hotels and bars are set to remain closed until further notice.

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