Friday, April 17, 2020

Asia Times: US futures spike as US President Donald Trump lays out guidelines for reopening economy at press conference

Tags
  • China
  • Dollar
  • Gold
  • Yen
  • Stocks
  • Oil
  • US earnings' season

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Market Recap: US futures spike as US President Donald Trump lays out guidelines for reopening economy at press conference

Stocks in the US managed to eke out gains on Thursday as US President Donald Trump was set to lay out his administration's guidelines for states to reopen from the current lockdown. The guidelines recommended a three-phase plan for states to return to a new normal, each of which will last two weeks. It will also recommend that states have a 14 day "downward trajectory" before starting the first phase. Non-essential travelling among other restrictions will only be advised to be lifted in the second phase of the guidelines.

In sector news, the healthcare and consumer discretionary sectors led gains among S&P500 sectors while energy and financials slumped. Morgan Stanley's Q1 earnings report was in line with other major US banks who reported earnings earlier this week. The bank beat estimates on earnings from equities and fixed income trading while overall earnings slumped as a result of higher loan loss provisions. Its shares inched 0.10% lower on Wednesday as a result. Blackrock's shares rose 3.59% despite reporting net outflows from its long-term investment products in Q1, pulling its total assets under management to US$6.47trillion.

Indexes Daily Change (%) Net Change Closing Price
Dow Jones +0.14% +33.33 23,537.68
S&P500 +0.58% +16.19 2,799.55
Nasdaq +1.66% +139.19 8,532.36
*Source: Bloomberg

The dollar fell against most major currencies on Thursday as investors were likely still cautious of the risks of a worse-than-expected economic downturn. Initial jobless claims for the week ending April 10th fell to roughly 5.2 million, pushing the total number of Americans filing for unemployment benefits to approximately 22 million over the last month. The depletion of funds for a US' small business loans program of US$350bn on Thursday likely also contributed to gains for the greenback. With Republicans and Democrats unable to agree on the details for a fresh round of funding for the program, loans to small businesses in the US will likely be delayed further, putting more pressure on the US economy. The Canadian dollar and Australian dollar were among the exceptions, strengthening against the dollar as the volatility of crude oil prices started to ease.

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Safe haven assets were mixed on Thursday, with gold inching only slightly higher ahead of the rest of the earnings season. The Japanese yen weakened against the dollar, while shorter-term US Treasuries fell. 10-year and 30-year treasuries rose, pushing benchmark 10-year yields slightly lower by 0.5bps to 0.63%.

Safe Haven Assets Daily Change (%) Net Change Closing Price
Gold +0.04% +0.67 1,717.70
Silver +0.21% +0.03 15.22
JPY -0.43% -0.46 107.92
*Source: Bloomberg
US Treasury yields Daily Change (bps) Yield (%)
2-Year +1.0 0.21%
10-Year -0.5 0.63%
30-Year -4.2 1.22%
*Source: Bloomberg

Oil traded flat on Thursday as OPEC reiterated an expected drop in demand for its crude. The bloc forecasted demand to slump the worse in the last three decades, expecting demand for its crude to average just slightly below 20 million barrels a day for Q2 2020. Brent inched only 0.47% higher while WTI remained flat under US$20 per barrel on Thursday.

Oil Futures Daily Change (%) Net Change Closing Price
Brent Crude +0.47% +0.13 27.82
WTI Crude 0.00% 0.00 19.87
*Source: Bloomberg

Meanwhile in Asia, stocks look likely to track gains in the US as the prospect of the US economy reopening will probably help to boost investor sentiment. Futures tracking major indices in the US surged as Trump gave more details of his reopening guidelines at a press conference after the US market closed. China's Q1 GDP will be in focus later today, as the extent of its total lockdown of the Wuhan province is expected to be fully reflected in today's economic data.

Asia Daily Change (%) Net Change Last Price As of (GMT +8)
Nikkei Index +2.67% +515.59 19,805.79 8:45:30 AM
KOSPI Index +2.70% +50.12 1,907.19 9:05:30 AM
ASX200 Index +2.33% +126.02 5,542.30 9:05:06 AM
*Source: Bloomberg
US Futures Daily Change (%) Net Change Last Price As of (GMT +8)
Dow Futures +3.42% +800.00 24,207.00 8:55:33 AM
S&P500 Futures +2.92% +81.50 2,869.00 8:55:34 AM
Nasdaq Futures +1.86% +162.25 8,896.50 8:55:35 AM
*Source: Bloomberg

Companies that are set to report earnings later today include (all timings in GMT +8):

  • Procter & Gamble (8.30pm)

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

  • China Q1 GDP (10am)
  • China Mar Retail Sales (10am)
  • China Mar Industrial Production (10am)
  • Japan Feb Industrial Production (12.30pm)
  • IMF/World Bank Development Comittee Meeting (6.30pm)