· Latest on the spread of the coronavirus around the world
Ø Total confirmed cases: More than 3,136,232
Ø Total deaths: At least 217,799
Ø The coronavirus COVID-19 is affecting 210 countries and territories around the world and 2 international conveyances: the Diamond Princess cruise ship harbored in Yokohama, Japan, and the Holland America's MS Zaandam cruise ship.
Ø US cases: At least 1,035,454 (+25,098), and deaths: 59,252 (+2,456)
Ø Thailand cases: At least 2,938 (+7), and deaths: 54 (+2)
· Dollar drops as month-end approaches
The dollar dropped against a basket of other currencies for the second day on Tuesday as investors rebalanced portfolios for month-end.
Stock investors were cheered by better than expected corporate earnings and economic optimism after several countries and U.S. states laid out plans to reopen businesses that were shut to stem the spread of the novel coronavirus.
Month-end rebalancing is also negative for the greenback with the U.S. dollar likely to be sold against the euro, sterling, the Japanese yen and the Australian dollar, according to Mark McCormick, global head of FX strategy at TD Securities in Toronto.
These flows, in combination with a number of central bank meetings this week, make it difficult to read too much into market moves, he said.
The dollar index fell 0.16% to 99.88. It has risen from 99.00 at the end of March.
Traders are next focused on a U.S. Federal Reserve meeting that will end on Wednesday and a European Central Bank (ECB) meeting on Thursday.
· The Fed may provide more details on the policy ‘bazooka’ it fired to help markets
The Fed is not expected to announce any new policy initiatives when its meeting ends Wednesday, but it could provide more details on the unprecedented moves it made to help the economy and financial markets over the past six weeks.
The Fed releases its statement at 2 p.m. ET and could provide more clarity on its view of the damage to the economy from the coronavirus. It may comment on its policy, but it is not likely to reveal anything new about how long it will keep interest rates low.
Fed Chairman Jerome Powell briefs the media at 2:30 p.m. ET.
Economists said by June, the Fed will have a better idea of the unemployment rate and how the economy is faring, as it starts emerging from the shutdowns.
Barclays chief U.S. economist Michael Gapen said the meeting is a transitional one, coming on the heels of emergency actions. “It’s an ending stage of the emergency response, the risk management lender of last resort, the throw-liquidity-at-the-problem phase.”
He said the Fed can discuss its broader view of the impact of the virus on the economy but not give new specifics on its forward guidance.
“Within the next 30 to 40 days, we could have a better view of how the economy is behaving as we come out of the lock down,” he said.
Economists expect the economy started deteriorating in the first quarter and that it will decline sharply in the second quarter. Gapen expects the nation’s gross domestic product to contract by 45% in the second quarter, which should be the trough of the downturn.
· Coronavirus upends central bankers' premier policy party, Jackson Hole
For the first time in nearly 40 years, the Federal Reserve Bank of Kansas City may not hold its annual global central bankers’ conference in Jackson Hole, Wyoming, after the historic lodge where the gathering usually takes place said it was unlikely to open for the 2020 season because of the coronavirus pandemic.
“We are considering the implications of this announcement for our annual Economic Symposium and will communicate additional details when they are available,” the Kansas City Fed said in an emailed statement.
· White House official warns of negative shocks before rebound later in 2020
Top Trump adminstration officials on Tuesday predicted a strong economic rebound in the fourth quarter as the coronavirus fades, but a senior White House adviser warned that near-term unemployment and GDP data will be a “very grave” negative shock.
Kevin Hassett, senior economic adviser to President Donald Trump told CNN that unemployment could reach 16-20%, and GDP output could fall as much as 30-40% on annualized basis in the second quarter, a prediction in line with Wall Street and Congressional Budget Office forecasts.
Earlier, U.S. Treasury Secretary Steven Mnuchin predicted that the economy could rebound by late summer as states allow the reopening of businesses that have been closed to slow the spread of the coronavirus.
Trump, at a White House event on Tuesday, also shifted the focus away from the near term, saying that the fourth quarter “is going to be really strong and I think next year is going to be a tremendous year.”
“The third quarter is a transition quarter. The second quarter is what it is,” Trump added.
· Trump to order U.S. meat processing plants to stay open despite coronavirus fears
President Donald Trump on Tuesday plans to order meat processing plants concerned about coronavirus outbreaks to stay open to protect the food supply in the United States, drawing a backlash from unions who said at-risk workers required more protection.
With concerns about food shortages and supply chain disruptions, Trump is expected to sign an executive order using the Defense Production Act to mandate that the plants continue to function, a senior administration official said.
· U.S. House not returning next week, Trump says Democrats on 'vacation'
Lawmakers in the U.S. House of Representatives will not return to Washington next week as planned, due to the continuing risk of coronavirus infection, Democratic leaders said on Tuesday, a reversal of plans outlined only a day earlier.
· Americans losing faith in what Trump says about the coronavirus: Reuters/Ipsos poll
Americans appear to be losing faith in what President Donald Trump says about the coronavirus pandemic, with almost everyone rejecting Trump’s remark that COVID-19 may be treated by injecting infected people with bleach or other disinfectants, according to a Reuters/Ipsos poll released on Tuesday.
The April 27-28 public opinion poll found that fewer than half of all adults in the U.S. - 47% - said they were “very” or “somewhat” likely to follow recommendations Trump makes about the virus. That is 15 percentage points lower than the number who said they would follow Trump’s advice in a survey that ran at the end of March.
And 98% of Americans said they would not try to inject themselves with bleach or other disinfectants if they got the coronavirus, including 98% of Democrats and 98% of Republicans. That is a near-unanimous rejection of an idea that Trump floated at a time of widespread anxiety about the virus.
· German employment survey plummets to historic low as coronavirus crisis hits
Germany is experiencing an “unprecedented” drop in employment levels, the German economic institute Ifo said on Tuesday, as the coronavirus pandemic hits Europe’s growth engine.
The Ifo’s employment barometer dropped to 86.3 points in April, having reached 93.4 points in March. The latest reading represents a “historic low,” where all four sectors (manufacturing, construction, services and trade) faced sharply lower employment.
Earlier this month, the International Monetary Fund (IMF) forecast a 7% contraction in Germany this year, on the back of the ongoing pandemic. The IMF also estimated a 3.9% unemployment rate in Germany for 2020, up from 3.2% last year.
· Fitch cuts virus-hit Italy's credit rating to just above junk
Rating agency Fitch cut Italy’s credit rating to “BBB-minus” on Tuesday, just one notch above junk, saying the downgrade reflects the impact of the coronavirus pandemic on the euro zone’s third largest economy.
· Spain to phase out coronavirus lockdown, eyes normality by end-June
Spain announced a four-phase plan on Tuesday to lift one of the toughest coronavirus lockdowns in Europe and return to normality by the end of June as the daily death toll fell to 301, less than a third of a record high of 950 in early April.
· South Korea business outlook for May slides to record low on virus impact
South Korea’s businesses confidence index slumped to the worst on record as the coronavirus pandemic put countries into lockdown, battering economic and social activities, a central bank survey showed.
The manufacturing BSI for May tumbled to a seasonally adjusted 45 from 52 for April, the Bank of Korea data published on Wednesday showed, the lowest reading of all time since the data was compiled in February 2003.
· Brent settles higher on hopes of easing lockdowns, U.S. crude falls amid storage shortage
U.S. crude prices settled about 3% lower on Tuesday after data showing domestic stockpiles didn’t rise as high as had been expected given tightening storage, despite pledges to cut production from May 1.
Markets were supported on hopes demand would recover after some authorities announced the easing of coronavirus-related restrictions. At least 16 U.S. states looked set to restart business, but Britain said it was too dangerous to relax the lockdown for fear of a second outbreak.
U.S. West Texas Intermediate (WTI) crude was down 44 cents, or 3.4%, at $12.34 a barrel. The contract plunged 25% on Monday.
Global benchmark Brent crude settled up 47 cents, or 2.3%, at $20.46 a barrel, following a 6.8% slide on Monday.
U.S. crude inventories rose by 10 million barrels in the week to April 24 to 510 million barrels, compared with analysts’ expectations for a build of 10.6 million barrels, data from industry group, the American Petroleum Institute, showed on Tuesday.
In the previous week, crude inventories rose by 15 million barrels to 518.6 million barrels, within striking distance of an all-time record of 535 million barrels set in 2017, the U.S. government said.
The Energy Information Administration will release inventory data Wednesday morning.
Globally, storage onshore was estimated to be about 85% full as of last week, according to data from consultancy Kpler.
Reference: CNBC, Reuters
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