China reports zero deaths from coronavirus
Marius Paun | London, UK | Senior dealer | Thursday, 09th April 2020
The US has seen Bernie Sanders suspending his Presidential campaign this week which means he’s out of the race for the Democratic nomination. The news was welcomed by Wall Street, who were rather concerned by the potential damage of the left-wing politicians’ proposed measures.
On Thursday afternoon the US Federal Reserve unveiled the long-awaited details of the $2.3 trillion program to support the economy. It was another injection, this time aimed at small businesses and municipal finances. Interesting enough the timing of the release almost coincided with the weekly jobless claims report. Although analysts anticipated another 5 million unemployment claims to be filed (on top of the 10 million already seen in the past 2 weeks) government revealed another batch of 6.6 million jobless claims. However, the markets were rather buoyed by the Fed announcement and it seems another stock market rally, or recovery at least, is underway.
China reported zero deaths from coronavirus for the first time since January. The news made headlines and even if it’s taken with a pinch of salt, it was still regarded as good news around the world. If anything, it showed that eventually lockdowns work, so the rest of the world can at least take some comfort from that.
On another note, aware that the growth target will be difficult to reach this year, People’s Bank of China could scrap their GDP target altogether in 2020.
In the UK on Monday, Prime Minister Boris Johnson was admitted to hospital following persistent symptoms 10 days after testing positive. Unfortunately, his condition got worse and he has since been taken into intensive, on the advice of his medical team. Foreign Secretary Dominic Raab was asked to deputise for him. The sterling pound dropped sharply as a consequence below 1.22 to the US dollar but rebounded to 1.2450 on Thursday afternoon on news that Prime Minister Boris Johnson’s condition is now more stable.
ECB policymaker Martins Kazaks expressed his frustration mid-week. He said the central bank has done its part and delivered its end of the bargain but that ‘it would be irresponsible if the European Union would leave ECB alone in the fighting of coronavirus’. His comments came as the EU finance ministers failed yet again to find common ground and the coronabonds issue was still a no after 16 hours of discussions.
Gold prices continued their good run, advancing from around $1600 at the beginning of the week to $1670 at the time of writing and seems firmly on course to retest the 2020 high of $1703.25 reached March 9.
Crude oil prices started the week on a back foot as the OPEC+ meeting scheduled for a renewed attempt to reduce output, was pushed back to April 9. It appears that Saudi Arabia and Russia are ready to come back to the table but insisted that contributions from outside the coalition should be on the cards. Over the weekend Russia said is ready to cut production by 10% if the US joins the cuts. In reaction, President Trump, not known for too much hesitation said he will put substantial tariffs on oil imports to protect workers and companies if the prices stay where they are.
Thursday afternoon, crude prices jumped over 10% on reports that Saudi Arabia and Russia have finally reached an agreement. Reuters reported that output cuts could be as high as 20 million barrels per day. Previously, energy analysts estimated that due to coronavirus the current daily oversupply could be in the region of 30 million barrels. Nonetheless, that rise in prices was quickly reversed as oil prices retraced to the level before the breaking news. A clear sign that the devil lies in the final details?