Thursday, April 9, 2020

UK Stocks Break Two-Day Winning Streak

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What’s happening: Stocks in Britain closed slightly lower on Wednesday on renewed coronavirus fears.

What happened: After rising for two consecutive sessions, UK stocks ended trading yesterday on a lower note. Stocks delivered a strong rally on the first two days of the week on signs of the growth in new coronavirus cases slowing. The positive sentiment was hurt, however, by the latest count.

Meanwhile, the UK Prime Minister remains in the ICU of a London hospital, although his condition is reportedly improving.

Why it matters: The UK reported a new daily high of 938 fatalities from coronavirus, taking the country’s death toll to over 7,000. The country’s health ministry reported that confirmed infections in the country had surged to around 61,000 after testing 282,000 people. Various health blamed the government’s slow response to the pandemic, with a shortage of tests and poor arrangement of ventilators, intensive care beds and other protective gears.

An independent US health research center, the Institute for Health Metrics and Evaluation, said it expects the number of deaths from COVID-19 to be the highest in Britain among the European countries.

Prime Minister Boris Johnson remains in ICU. Reporting on the high-profile case, UK Chancellor Rishi Sunak said on Wednesday that the UK PM is responding to the treatment and his health condition is improving. Foreign Secretary Dominic Raab is performing duties of the PM, while Boris Johnson is in hospital.

News of Johnson not needing a ventilator was received well by the markets. Johnson is the first leader in the world to test positive for COVID-19 and was hospitalized ten days after contracting the virus. The country’s PM was moved to the ICU on Monday due to respiratory problems.

The FTSE 100 fell 0.47% on Wednesday. Whitbread was among the top blue-chip performers, jumping 9%. Fresnillo, the worst performer among the blue chips, saw its shares fall by more than 5%. Shares of retailer WH Smith spiked 8% after the company announced a capital raise of £165.9 million from shareholders.

What to watch: Markets will be monitoring the health condition of the UK Prime Minister. Investors also hope to see a decline in the number of coronavirus cases and deaths. Various economic reports will also remain in focus today, with the country scheduled to release data on balance of trade, industrial production and gross domestic product. Britain's GDP growth is expected to slow to 0.5% in February, from 0.6% in January. Industrial production is expected to rise 0.1% in February, versus a 0.1% decline in January.

The Markets Today

     

Investors will be focusing on the Canadian dollar today, with markets awaiting the jobs report scheduled for release later in the day.

Context: After reaching an 11-day high in the previous session, the Canadian dollar gave back some of its gains versus the greenback on Wednesday. The Canadian dollar came under pressure as the country’s housing report depicted signs of some economic damage from the COVID-19 pandemic.

Details: The national housing agency reported that Canada’s housing starts had declined 7.3% in March, a sign of the virus hurting residential construction activity. The value of building permits slid 23.2% in March.

Prime Minister Justin Trudeau said on Tuesday that the country will continue to persuade the US to not obstruct the export of medical supplies.

Canada has been hurt by the crash in crude prices, with oil being one of the country’s biggest exports. Crude oil rose on Wednesday on hopes that the OPEC+ meeting will trigger production cuts necessary to lift prices.

Canada has also closed various parts of its economy with the authorities trying to control the spread of COVID-19. The country has confirmed over 19,200 cases of the novel coronavirus, with 435 deaths.

The USD/CAD pair was trading higher by 0.09% at 1.4024 in the Asian session.

What to watch: Markets are hoping to see a positive outcome from the OPEC+ meeting so that the country can receive some support from a rise in oil prices. Investors also await the release of the jobs report from the country. Employment in Canada, which rose by 30,300 in February, is expected to decline by 350,000 in March. The unemployment rate is expected to rise to 7.2% in March, from 5.6% in February.

Other Markets: US indices closed higher on Wednesday, with the Dow, S&P 500 and Nasdaq 100 rising 3.44%, 3.41% and 2.58%, respectively.

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Italy’s industrial production, Brazil's consumer prices, Russia’s current account as well as US initial jobless claims, producer prices, wholesale inventories, University of Michigan's consumer sentiment index and natural gas stocks change.