· CORONAVIRUS UPDATES:
Ø Russia cases: At least 252,245 (+9,974) and deaths: 2,305 (+93)
Ø Brazil cases: At least 202,918 (+13,761) and deaths: 13,993 (+835)
Ø Thailand cases: At least 3,018 (+1) and deaths: 56
· Dollar climbs to 3-week peak; US jobs data shrugged off
The dollar rose to a three-week high on Thursday, as stock markets weakened broadly after Federal Reserve Chairman Jerome Powell dismissed speculation over U.S. interest rates entering negative territory.
European stock markets fell, and U.S. stocks were also down, the third consecutive session of losses and sending investors to the relative safety of the greenback.
Comments from top U.S. infectious disease expert Anthony Fauci earlier this week, warning about the premature lifting of lockdowns that could lead to additional outbreaks of the deadly novel coronavirus, also dented market sentiment, analysts said.
U.S. President Donald Trump on Thursday said he was disappointed with China over its failure to contain the coronavirus, and that the pandemic cast a pall over his U.S.-China trade deal.
His comments stoked concerns about renewed U.S.-China trade tensions.
Against a basket of its rivals, the dollar was up 0.3% at 100.41, hitting a three-week high of 100.56 earlier in the session.
Though Powell was the latest in a parade of policymakers to brush off the notion that rates may go negative, Fed futures were pricing a small chance of sub-zero U.S. rates by May next year.
Powell said the recovery could take some time as he warned of a recession worse than any since World War Two.
Data showing millions more Americans, including white-collar workers, filed for unemployment benefits last week only cemented bids on the dollar. Initial claims for state unemployment benefits totaled a seasonally adjusted 2.981 million for the week ended May 9. That was down from 3.176 million in the prior week and marked the sixth straight weekly drop.
The euro was down 0.2% against the dollar at $1.0793.
The pound also tumbled below the $1.22 line for the first time in more than five weeks after Wednesday’s data showed Britain’s economy shrank by a record 5.8% in March as the coronavirus crisis escalated.
· Fed’s Kaplan says economy needs to be reopened, but gradually
The U.S. economy needs to reopen after extended shutdowns to slow the spread of the coronavirus pandemic, but reopening must be gradual and with enough testing and other procedures that people feel comfortable to reengage, Dallas Federal Reserve Bank President Robert Kaplan said on Thursday.
· Fed corporate bond program starts with a fizzle as total assets near $7 trln
The Federal Reserve’s stash of bonds and other assets grew to nearly $7 trillion this week, but several of its programs are seeing slackening demand from banks and investors, and a much-anticipated corporate bond-buying facility bought little in its first two days of operations.
The Fed’s weekly report of holdings inside its massive balance sheet showed total assets rose by $212 billion in the week ended May 13, to $6.98 trillion, as its pace of mortgage bond purchases picked up.
The data showed the Fed’s first-ever holdings of corporate bonds totaled just $305 million after the newest emergency facility launched by the central bank kicked off purchases on Tuesday.
· Goldman Sachs says a second wave of coronavirus could make the Fed rethink negative interest rates
Another “big setback” in the U.S. economy could prompt the Federal Reserve to consider cutting interest rates into negative territory — but such a monetary policy wouldn’t be “very helpful,” a Goldman Sachs strategist said on Thursday.
Fed Chairman Jerome Powell on Wednesday reiterated that the central bank is not considering negative interest rates at this point, even as other central banks — such as the Bank of England — appeared to be opened to the idea.
When asked what could change the Fed’s mind on negative interest rates, Zach Pandl, Goldman Sachs’ co-head of global foreign exchange, rates and emerging markets strategy, raised the possibility of a second wave of coronavirus cases that could derail the upcoming economic recovery that many analysts and investors have expected.
“If the economy has another big setback ... where you have a second wave of infections and it would really take the recovery off course, then I do think that that opens up a possibility of a range of additional actions,” he told CNBC’s “Street Signs Asia.”
· White House would likely support a new round of stimulus checks, sources say
The White House would likely support a new round of stimulus checks, sources told CNBC on Thursday.
The White House did not provide further comment except to release a statement which said:
“As President Trump has said, we are going to ensure that we take care of all Americans so that we emerge from this challenge healthy, stronger, and with economic prosperity, which is why the White House is focused on pro-growth, middle class tax and regulatory relief.”
The first round of stimulus checks was part of a $2 trillion package authorized by Congress. The legislation called for using past tax returns from either 2018 or 2019, whichever is most recent, to determine eligibility for a stimulus payment.
The payments were up to $1,200 for individuals or $2,400 for married couples who file jointly, plus $500 for qualifying dependents. The payments were targeted at individuals making up to $75,000 and couples who earned up to $150,000 in adjusted gross income. Above that, the checks were reduced, and they eventually phased out completely at $99,000 in income for individuals and $198,000 for married couples.
· U.S. faces 'darkest winter' if pandemic planning falters: whistleblower
Hours after President Donald Trump railed against him on Twitter, whistleblower Rick Bright testified to a U.S. House of Representatives panel about readiness for the outbreak.
Bright was removed last month as director of the Biomedical Advanced Research and Development Authority, or BARDA, a part of the U.S. Department of Health and Human Services responsible for developing drugs to fight the coronavirus.
· WHO warns it could take up to 5 years before the coronavirus pandemic is under control
The coronavirus pandemic may continue into the latter half of the decade, a senior global health official has warned, as the death toll of the virus approaches the grim milestone of 300,000.
Dr. Soumya Swaminathan, the World Health Organization’s chief scientist, told the Financial Times’ Global Boardroom webinar on Wednesday: “I would say in a four to five-year timeframe, we could be looking at controlling this.”
Swaminathan said a vaccine appeared to be the “best way out” at present but warned there were lots of “ifs and buts” about its safety, production and equitable distribution.
The development of an effective vaccine and successful confinement measures were both among the factors that would ultimately determine the pandemic’s duration, she added, the FT reported.
· U.S. Senate approves bill to pressure China over Uighur rights
The U.S. Senate approved legislation on Thursday calling on President Donald Trump’s administration to toughen its response to China’s crackdown on its Uighur Muslim minority, the latest push in Washington to punish China as Trump blames Beijing for worsening the coronavirus pandemic.
The Republican-led Senate passed the bill by unanimous consent, without a roll-call vote. Passage sends the measure to the Democratic-led House of Representatives, which must approve it before it is sent to the White House for Trump to sign into law or veto.
· Trump says he doesn't want to talk to Xi right now, could even cut China ties
U.S. President Donald Trump signaled a further deterioration of his relationship with China over the novel coronavirus, saying he has no interest in speaking to President Xi Jinping right now and going so far as to suggest he could even cut ties with the world’s second largest economy.
In an interview with Fox Business Network broadcast on Thursday, Trump said he was very disappointed with China’s failure to contain the disease and that the pandemic had cast a pall over his January trade deal with Beijing, which he has previously hailed as a major achievement.
“They should have never let this happen,” Trump said. “So I make a great trade deal and now I say this doesn’t feel the same to me. The ink was barely dry and the plague came over. And it doesn’t feel the same to me.”
· UK manufacturers less confident about swift return to work: survey
British manufacturers think it will take longer to recover from the economic impact of COVID-19 than just a couple of weeks ago, according to an industry survey on Friday.
Three-quarters do not think business will be back to normal within six months, and 36% think it will take more than a year - twice the proportion two weeks ago, trade body Make UK said.
· China healthcare investment booms on virus-related spending bets
China’s healthcare and biotech firms are capitalising on a surge of interest in the sector due to the coronavirus pandemic by raising a record $6.8 billion in fresh equity-linked transactions this year.
While healthcare and related sectors have long been popular, with investors betting that China’s ageing population and growing middle class would boost spending, the virus has raised expectations that Beijing will funnel even more funds into them.
China’s healthcare expenditure accounted for just 6.6% of its GDP in 2018, compared with 17.7% in the United States, according to official data from the two countries.
· Oil jumps 9% on dip in U.S. crude stockpiles, IEA data
Oil prices surged on Thursday after the International Energy Agency forecast lower global stockpiles in the second half of 2020, even as worries remain over a second surge in coronavirus infections in coming months.
Crude prices have ticked up in the last two weeks as some countries relaxed coronavirus restrictions and lockdowns to allow factories and shops to reopen.
West Texas Intermediate crude futures surged 8.98%, or $2.27, to settle at $27.56 per barrel, while Brent crude futures rose $1.94, or 6.65%, to settle at $31.13 per barrel.
The market rebounded from Wednesday’s losses built on a glum forecast for the economy from U.S. Federal Reserve Chairman Jerome Powell, who warned of an “extended period” of weak economic growth. That offset an unexpected drop in U.S. stockpiles.
Reference: Reuters, CNBC
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