Tuesday, March 31, 2020

Asia Times: US and Russian energy officials set to meet in an attempt to lift oil prices after Brent crude oil futures hit 18-year low

Tags
  • Dollar
  • Gold
  • Yen
  • Stocks
  • Oil

03312020a

Market Recap: US and Russian energy officials set to meet in an attempt to lift oil prices after Brent crude oil futures hit 18-year low

Wall Street surged on Monday, recovering most of the losses on Friday amid optimism on the coronavirus outbreak. House Speaker Nancy Pelosi's plans to draw up a fourth stimulus package likely also helped lift equities later in the trading session. Pelosi has reportedly started to build on proposals for the next round of stimulus, which some Democrats signalling that it would be targeting healthcare workers and protective equipment. But Pelosi has also said that she does not expect an agreement before April 20th, unless a sudden spike in cases or deaths of the coronavirus warranted an emergency stimulus package.

Gains in the S&P500 were led by stocks in the healthcare and tech sector, rising 4.67% and 4.23% on Monday respectively. In the healthcare sector, Johnson & Johnson advanced 8.00% after being named in a vaccine deal with the US government. The pharmaceutical giant has been working with a division from the US Department of Health and Human Services on a vaccine for the Covid-19 virus and plans to start human trials later this September and aims to manufacture the first batch of vaccines by early next year for emergency use. The S&P500 is now down 18.70% YTD and 22.43% lower from its high on February 19th.

Indexes Daily Change (%) Net Change Closing Price
Dow Jones +3.19% +690.70 22,327.48
S&P500 +3.35% +85.18 2,626.65
Nasdaq +3.62% +271.77 7,774.15
*Source: Bloomberg

The dollar recovered against most major currencies on Monday after five straight days of losses last week. The loonie performed the worse among major currencies as oil prices continued to dive on Monday.

03312020b

Safe haven assets were mixed on Monday as investors started to shift to risk-on strategies, although determining which assets and specific sectors likely slowed the shift. Gold fell slightly along with longer-term US Treasuries, while the yen and two-year bonds advanced. Benchmark 10-year yields rose 5.2bps to 0.73%.

Safe Haven Assets Daily Change (%) Net Change Closing Price
Gold -0.35% -5.65 1,622.51
Silver -2.90% -0.42 13.83
JPY +0.17% +0.18 107.76
*Source: Bloomberg
US Treasury yields Daily Change (bps) Yield (%)
2-Year -1.4 0.23%
10-Year +5.2 0.73%
30-Year +7.3 1.34%
*Source: Bloomberg

Brent dipped to an 18-year low after losing 8.70%, or US$2.17 to US$22.76 per barrel on Monday as the oil market continues to be flooded with supply. But oil prices may be able to recover some of its losses on Tuesday, after US President Donald Trump shifted his focus towards the declining oil sector, agreeing with Russian President Vladimir Putin in a phone call on Monday for energy officials from the two countries to meet to discuss the state of the global energy market in a bid to help stabilise oil prices that has damaged the US shale oil industry. Brent and WTI crude oil futures were trading 1.27% and 3.19% higher as of 8.34am (GMT +8) on Tuesday as a result.

Oil Futures Daily Change (%) Net Change Closing Price
Brent Crude -8.70% -2.17 22.76
WTI Crude -6.60% -1.42 20.09
*Source: Bloomberg

Asian stocks were mostly higher on Tuesday morning and should see some recovery later in the trading session, tracking gains in the US equities market on Monday. The Nikkei was trading a touch lower on Tuesday morning, likely as a result of a strengthening yen and the postponement of the Tokyo Olympics. The Tokyo Olympics has been pushed back by a year to be held from July 23rd 2021 to August 8th 2021, which would clash with the world championship events for track and field in Oregon, US and aquatics in Fukuoka, Japan. This could potentially cause reduced revenues from broadcasting in addition to the extra costs from maintaining empty venues and staff payrolls for a year to 2021. Futures tracking major indices in the US were slightly higher on Tuesday morning as well.

Asia Daily Change (%) Net Change Last Price As of (GMT +8)
Nikkei Index -0.07% -12.99 19,071.98 8:25:20 AM
KOSPI Index +1.90% +32.61 1,749.73 8:45:20 AM
ASX200 Index +2.96% +153.42 5,334.80 8:45:05 AM
*Source: Bloomberg
US Futures Daily Change (%) Net Change Last Price As of (GMT +8)
Dow Futures +0.12% +26.00 22,190.00 7:50:56 AM
S&P500 Futures +0.17% +4.50 2,615.00 7:51:20 AM
Nasdaq Futures +0.22% +17.50 7,869.50 7:51:12 AM
*Source: Bloomberg

Economic releases for the day ahead include (all timings in GMT +8):

  • UK Q4 GDP (F) (2pm)
  • Germany Mar Unemployment Rate/Change (3.55pm)
  • Canada Jan GDP (8.30pm)
  • US Mar Consumer Confidence (Conf. Board) (10pm)