Europe Largely Flat; Eyes on U.S. Unemployment Data

Europe Largely Flat; Eyes on U.S. Unemployment Data

By Ritu,

Capital Sands

European stock markets traded in tight ranges Thursday, after Wednesday’s sharp losses to start the month, with the tone remaining cautious as investors awaited key U.S. unemployment data later.

At 3:55 ET (0755 GMT), the U.K.’s FTSE index traded 0.4% higher, France’s CAC 40 was up 0.2%, while the DAX fell 0.2%. The broader based Stoxx 600 Europe index was flat.

The three cash indices all posted losses of around 4% Wednesday as the damage done by the virus outbreak continued to weigh on investor sentiment.

Oil and gas stocks led the way as crude prices bounced strongly after President Trump stated late Wednesday that Russia and Saudi Arabia would make a deal to end their price war within a “few days”. Royal Dutch Shell shares were up 6.9% while BP shares rose 6.5%.

Global oil prices have fallen by roughly two-thirds this year as the coronavirus has slammed global economies at the same time major producers Saudi Arabia and Russia have started to flood the market with oil.

At 3:55 AM ET, U.S. crude futures traded 9.0% higher at $22.13 a barrel. The international benchmark Brent contract rose 9.3% to $27.04.

Delivery Hero  shares dropped 2% after the online food delivery marketplace announced measures to support restaurants that are trying to survive coronavirus lockdowns by ramping up deliveries to consumers stuck at home.

Shares in Credit Agricole climbed 3% after it cancelled the 2019 dividend following a recommendation from the European Central Bank. This follows similar steps taken by many of its European peers.

While the Financial Conduct Authority’s proposal of a range of new measures to support households, including three-month payment freezes on loans and credit card debt, weighed on U.K. banks. HSBC dropped 4% while Lloyds  fell 1.8%.

Still, most eyes Thursday will be on the release of the latest unemployment data in the U.S. later in the session.

The starkest evidence of the economic damage caused by the coronavirus pandemic came last week when weekly U.S. initial jobless claims, one of the earliest gauges of economic trends, jumped to 3.28 million, blowing past the previous record of 695,000 set in 1982.

Economists expect claims for first-time unemployment benefits to have jumped by 3.5 million last week, when the figures are released at 8:30 AM ET (1230 GMT).

The forecasts in a Reuters poll range from 1.5 million to 5.25 million.

In Europe, meanwhile, Spain registered its largest ever monthly rise in jobless, as over 302,000 people filed for benefits in March.

Elsewhere, gold futures rose 0.9% to $1,606.50/oz, while EUR/USD traded at 1.0939, down 0.2% on the day.

In Delhi, riots deepen a Hindu-Muslim divide

In Delhi, riots deepen a Hindu-Muslim divide

By Ritu,

Capital Sands

For years, Hindus and Muslims lived and worked peacefully together in Yamuna Vihar, a densely populated Delhi district.

But the riots that raged through the district last month appear to have cleaved lasting divisions in the community, reflecting a nationwide trend as tensions over the Hindu nationalist agenda of Prime Minister Narendra Modi boil over.

Many Hindus in Yamuna Vihar, a sprawl of residential blocks and shops dotted with mosques and Hindu temples, and in other riot-hit districts of northeast Delhi, say they are boycotting merchants and refusing to hire workers from the Muslim community. Muslims say they are scrambling to find jobs at a time when the coronavirus pandemic has heightened pressure on India’s economy.

The trigger for the riots, the worst sectarian violence in the Indian capital in decades, was a citizenship law introduced last year that critics say marginalises India’s Muslim minority. Police records show at least 53 people, mostly Muslims, were killed and more than 200 were injured.

Dhingra said the unrest had forever changed Yamuna Vihar. Gutted homes with broken doors can be seen across the neighbourhood; electricity cables melted in the fires dangle dangerously above alleys strewn with stones and bricks used as makeshift weapons in the riots.

Mohammed Taslim, a Muslim who operated a business selling shoes from a shop owned by a Hindu in Bhajanpura, one of the neighbourhoods affected by the riots, said his inventory was destroyed by a Hindu mob.

Many Muslims said the attack had been instigated by hardline Hindus to counter protests involving tens of thousands of people across India against the new citizenship law.

Emboldened by Modi’s landslide electoral victory in 2014, hardline groups began pursuing a Hindu-first agenda that has come at the expense of the country’s Muslim minority.

Vigilantes have attacked and killed a number of Muslims involved in transporting cows, which are seen as holy animals by Hindus, to slaughterhouses in recent years. The government has also adopted a tough stance with regard to Pakistan, and in August withdrew semi-autonomous privileges for Jammu and Kashmir, India’s only Muslim-majority state.

Dollar Regains Ground as Coronavirus Spreads Globally

Dollar Regains Ground as Coronavirus Spreads Globally

By Ritu,

Capital Sands

The dollar regained ground against a currency basket on Monday as a surge in new cases of coronavirus globally, most notably in Italy, renewed concerns over the economic impact of the outbreak.

Authorities in Italy imposed a quarantine in the north of the country to try to halt what is the largest outbreak of the virus in Europe, with the number of cases jumping to above 150 on Sunday from just three before Friday.

in South Korea the number of infections has surged to more than 700 with seven deaths and Iran has confirmed 43 cases and eight deaths.

On Monday China reported only 11 new cases outside Hubei province, where the virus originated, indicating that the spread of the virus in the rest of the country has slowed.

Chinese authorities have been urging business to resume work in order to spearhead a recovery in the world’s second largest economy.

The Australian and New Zealand currencies remained on the back foot, with the Aussie hitting a fresh 11-year low overnight and the kiwi shedding half a percent.

Heightened risk aversion, which also saw stocks tumble and gold and bonds rise, offered some support to the traditional safe haven yen, but concerns over Japan’s virus exposure still weighed.

The dollar was trading at 111.39 per yen , down 0.2%.

“U.S. dollar assets provide relative attractiveness,” they wrote. “In fact, our economists forecast no impact on U.S. growth from Covid-19, with relatively few domestic incidents and a low dependency on China’s economy.”

Against a basket of currencies, the U.S. dollar index crept back toward an almost three-year peak touched last week, before soft economic data knocked it from its perch on Friday.

Yen Near 9-Month Lows, Euro Stays on the Back Foot

Yen Near 9-Month Lows, Euro Stays on the Back Foot

By Ritu,

Capital Sands

The safe haven yen was trading close to nine-month lows against the dollar on Thursday as risk appetite was underpinned by expectations that China will continue with steps to offset the economic impact of the coronavirus epidemic.

The dollar was trading at 111.69 against the Japanese currency , not far from the highest level since May 2019. The yen dropped 1.3% on Wednesday, its largest one-day percentage decline since August.

China’s central bank lowered its benchmark lending interest rate on Thursday, adding to measures aimed at limiting the impact from business shutdowns and travel curbs on the world’s second-largest economy.

The Chinese yuan was slightly lower against the dollar following the rate cut.

China reported a steep drop in the number of new cases of the virus on Thursday, partially due to a change in its reporting methodology, but the data supported risk appetite.

The euro was trading at 1.0788, close to its weakest level since April 2017. The single currency has been pressured lower after a recent string of weak eurozone economic data boosted speculation that monetary policy will remain looser for longer.

The latest Federal Reserve meeting minutes published on Wednesday showed that policymakers were cautiously optimistic about their ability to keep interest rates on hold this year while acknowledging new risks caused by the virus outbreak.

Minnesota Fed president Neal Kashkari, widely seen as one of the most ‘dovish’ of the Fed’s top brass, said on Wednesday that, as regards the key fed funds rate, “If I were to guess, I’d guess we’re probably going to sit here for the next three months, next six months, maybe longer.”

Against a basket of currencies, the greenback was hovering near a four-month high at 99.69. It touched multi-year highs against the Australian dollar overnight after data showing that Australia’s jobless rate climbed unexpectedly in January.

Dollar in Demand; Turkish Central Bank in Focus

Dollar in Demand; Turkish Central Bank in Focus

By Ritu,

Capital Sands

The U.S. dollar continues to gain fans Wednesday, with China’s coronavirus continuing to batter economies in Asia, Europe showing very few signs of growth while the U.S. economy exhibits a reasonably healthy glow.

EUR/USD traded at 1.0798, after pushing as low as $1.0786 for the first time since April 2017. The U.S. Dollar Index, which tracks the greenback against a basket of six other currencies, stood at 99.323, having earlier climbed as high as 99.382, at heights not seen for over two years. USD/JPY climbed 0.2% to 110.09, GBP/USD traded at 1.30, while USD/CNY traded around the physiologically important 7 level.

China, the world’s second-largest economy, is still struggling to get its manufacturing sector back online after imposing severe travel restrictions to contain a virus that emerged in the central province of Hubei late last year.

Analysts polled by Reuters expect China’s economic growth could slow to 4.5% in the first quarter from 6% in the previous quarter, but some recently downgraded forecasts again into the 3-4% range.

At the same time, Japan’s GDP growth shrank the fastest in six years, according to data released Monday, Hong Kong is heading for its first back-to-back annual recessions on record, and Singapore will post its biggest budget deficit since at least 1997 as it tries to support its economy.

The news in Europe isn’t much better. The German ZEW sentiment index Tuesday, the first data reading post the coronavirus hit, deteriorated badly, while a leading industry lobby stated Wednesday that the German economy, the largest in the eurozone, is unlikely to see much genuine growth this year.

At the same time, on the U.S. side, the Empire state manufacturing sector survey was stronger than expected Tuesday, moving to the highest level since spring last year, before the U.S. escalated the trade war.

Apple hits stocks, euro near three-year low

Apple hits stocks, euro near three-year low

By Ritu,

Capital Sands

World stocks markets were knocked off record highs on Tuesday as two of the world’s mega companies reported damage from the coronavirus outbreak.

Apple’s stock fell almost 6% in Frankfurt and all Europe’s main markets fell after the iPhone maker warned it was unlikely to meet the March quarter sales guidance it had set just three weeks ago.

HSBC announced a massive restructuring that involved shedding $100 billion of assets and slashing 35,000 jobs over three years. It also warned about the impact of the coronavirus on its Asia business. The stock fell more than 2% in Hong Kong trade.

“We have been pointing out that the market reaction in past weeks was excessively constructive and this could be a wake-up call to all investors that ignored so far potential negative impact,” analysts at UniCredit said.

The warning from Apple sobered investors who had hoped stimulus from China and other countries would protect the global economy from the effects of the epidemic.

Europe’s 0.4% to 0.5% declines came after Tokyo’s Nikkei dropped 1.4% as tech stocks globally reacted to Apple’s warning. China’s CSI300 gave up 0.5% after gaining on Monday, encouraged by a central bank rate cut and government stimulus hopes.

S&P 500 e-mini futures slipped 0.4% and Nasdaq futures fell 0.6%.

Bonds were in demand, with the 10-year U.S. Treasuries yield falling 4 basis point to just above 1.5%. Safe-haven gold rose to its highest in two weeks and oil prices fell nearly 2% after five days of gains.

The yen rose 0.15% to 109.69 yen per dollar while the risk- and China-sensitive Australian dollar lost 0.4% to $0.6686. The yuan was steadier, trading at 6.9950 per dollar.

Pin It on Pinterest