Monday, April 20, 2020

Asia Times: US lawmakers hopeful that an agreement can be made early this week to replenish funds for its loans program targeting small businesses

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  • China
  • Dollar
  • Gold
  • Yen
  • Stocks
  • Oil
  • Brent

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Market Recap: US lawmakers hopeful that an agreement can be made early this week to replenish funds for its loans program targeting small businesses

Stocks in the US gained last Friday thanks to a select number of companies driving the market. Boeing shares surged 15% as it announced plans to restart its commercial jet production in Washington. Gilead Sciences advanced more than 9% as reports revealed that it was making progress on its vaccine for the coronavirus.

In sector news, the S&P500 energy sector index soared 10.43%, followed by a rebound in financial stocks by 5.57%, likely as news of progress on a vaccine by Gilead Sciences helped fuel optimism for a potential reopening of US states that are currently on lockdown.

Indexes Daily Change (%) Net Change Closing Price
Dow Jones +2.99% +704.81 24,242.49
S&P500 +2.68% +75.01 2,874.56
Nasdaq +1.38% +117.78 8,650.14
*Source: Bloomberg

Most major indices around the world gained over last week, with the Nasdaq and S&P500 leading gains. With the exception of the European indices, it was the second week in a row that major indices were higher. Over the past two weeks, the Nasdaq has risen 17.32% while both the S&P500 and DJIA advanced more than 15%.

Indexes Weekly Change (%) Net Change Closing Price
Dow Jones +2.21% +523.12 24,242.49
S&P500 +3.04% +84.74 2,874.56
Nasdaq +6.09% +496.57 8,650.14
FTSE100 -0.95% -55.70 5,786.96
Euro Stoxx -0.16% -4.49 2,888.30
CSI300 +1.87% +70.31 3,839.49
Nikkei +2.05% +398.76 19,897.26
KOSPI +2.89% +53.83 1,914.53
ASX200 +1.86% +100.23 5,487.54
Hang Seng +0.33% +79.67 24,380.00
Straits Times +1.68% +43.28 2,614.60
*Source: Bloomberg

Meanwhile, only the New Zealand dollar weakened against the dollar on Friday while all other major currencies strengthened against the greenback. The decline of the dollar signals that investors are still optimistic that the US economy will reopen soon as the number of new coronavirus cases in hard-hit states starts to ease. Economic data in China released on Friday highlighted the extent of the economy damage the country suffered as a result of its lockdown earlier in the year. China's GDP for Q1 and retail sales for March fell much lower than expected, with Q1 GDP declining 6.8% and retail sales plunging 15.8% YoY as the effects of the lockdown in multiple cities earlier in the year weighed on consumer spending. China's industrial production was better-than-expected however, dropping only 1.1% instead of the consensus for a 6.2% drop YoY as factory workers started to return to work since the start of March.

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Gold sank on Friday likely as a result of a correction and as investors were seemingly more bullish in their shorter-term outlook. The Japanese yen strengthened slightly against the dollar, although this was more likely a result of reduced demand for the greenback. US Treasuries were mixed, with shorter-term treasuries advancing while longer-term treasuries fell. 2-year yields inched 0.5bps lower to 0.20% while benchmark 10-year yields rose 1.5bps to 0.64%.

Safe Haven Assets Daily Change (%) Net Change Closing Price
Gold -2.03% -34.88 1,682.82
Silver -2.06% -0.32 15.03
JPY +0.35% +0.38 107.54
*Source: Bloomberg
US Treasury yields Daily Change (bps) Yield (%)
2-Year -0.5 0.20%
10-Year +1.5 0.64%
30-Year +3.7 1.26%
*Source: Bloomberg

In energy markets, signals from both Saudi Arabia and Russia to take more measures to lift oil prices failed to stop oil prices from falling further. Brent inched only slightly higher on Friday while the US WTI benchmark fell another 8.05%. WTI crude oil futures plunged again on Monday morning, dropping below US$16 per barrel as of 8.59am (GMT +8) as demand continues to be crippled amid the global lockdown. The current active contract's expiration date (the current active contract is for May, which expires tomorrow) is likely also a contributor to falling prices of the US benchmark.

Singapore oil trading company, Hin Leong, concealed roughly US$800 million in losses in futures trading, forcing the company to sell part of its million barrels of refined energy products that it used as collateral to secure loans from banks. This implies that banks that had made loans to the oil trading company is likely to incur large losses as the amount of collateral available for collection in substitution for its debts has dwindled down.

Oil Futures Daily Change (%) Net Change Closing Price
Brent Crude +0.93% +0.26 28.08
WTI Crude -8.05% -1.60 18.27
*Source: Bloomberg

Asia looks likely to start the week on a weaker note, as earnings season in the US comes into full effect and as investors wait on more economic data from major countries to fully grasp the impact of the virus. Futures tracking US major indices were also lower on Monday morning despite news that US House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin were optimistic that an agreement to replenish funds for its small businesses loan program may be reached early this week.

Asia Daily Change (%) Net Change Last Price As of (GMT +8)
Nikkei Index -0.73% -145.43 19,751.83 8:53:10 AM
KOSPI Index -0.05% -1.03 1,913.50 9:13:10 AM
ASX200 Index -0.66% -36.34 5,451.20 9:13:05 AM
*Source: Bloomberg
US Futures Daily Change (%) Net Change Last Price As of (GMT +8)
Dow Futures -0.33% -80.00 24,079.00 9:06:08 AM
S&P500 Futures -0.30% -8.75 2,861.25 9:06:07 AM
Nasdaq Futures -0.16% -13.75 8,795.25 9:06:07 AM
*Source: Bloomberg

Companies reporting earnings for the day ahead include (all timings in GMT +8 where available):

  • China Mobile (6pm)
  • IBM (5am +1)

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

  • US Mar National Activity Index (Chicago Fed) (8.30pm)