Europe Edges Lower; FTSE 100 Outperforms

Europe Edges Lower; FTSE 100 Outperforms

By Ritu,

Capital Sands

European stock markets traded slightly lower Wednesday amid weak economic data, while better than expected earnings helped the U.K. to outperform.

At 4:35 AM ET (0835 GMT), the DAX in Germany traded 0.1% lower, France’s CAC 40 fell 0.2%, while the U.K.’s FTSE 100 index traded up 0.7%.

German factory orders slumped 15.6% in March to their lowest level since records began in 1991, while IHS Markit’s final Composite Purchasing Managers’ Index for the euro zone, seen as a good indicator of economic health, plummeted to 13.6 in April from March’s already dire 29.7, easily its lowest reading since the survey began in 1998.

On a busy day for corporate news, BMW  stock fell 3% despite reporting a 133% rise in first-quarter profit. That was mainly due to a one-off provision in the year-earlier period. The German automaker offered up downbeat guidance, saying the impact of the coronavirus could erode demand and profit over the whole year.

Norwegian Air Shuttle  slumped 11% after saying it would sell new shares at a 79% discount to the latest traded price as it seeks to boost its equity in order to qualify for Norway’s government aid package.

Italian bank UniCredit eked out a 1.0% gain despite posting a 2.7 billion-euro loss on soaring provisions.

By contrast, shares in ITV , Britain’s biggest free-to-air commercial broadcaster, rose over 4% despite saying ad revenue last month fell by 42%, while withdrawing its 2019 final dividend. Investors had worried that the figures could have been worse.

Ocado  stock rose 2% after the British online supermarket said retail revenue soared 40% year-on-year in its second quarter to date as shoppers in coronavirus lockdown sought deliveries to avoid venturing out. And pharma company AstraZeneca rose 1.4% to another all-time high after the U.S. Food and Drug Administration approved its Farxiga drug for treating heart conditions.

The countdown to Friday’s historic employment report begins Wednesday with a measure of April’s private sector job situation.

ADP  issues its payrolls report at 8:15 AM ET (1215 GMT), the first full measure of a month the country spent on lockdown restrictions. Economists expect that private-sector payrolls plunged by 20.05 million, according to forecasts compiled by Investing.com.

Oil futures edged higher Wednesday, helped by the American Petroleum Institute saying late Tuesday that its measure of inventories for the week ended May 1 rose by 8.4 million barrels, compared with a rise of 10 million barrels the week before.

The Energy Information Administration will post its figures for crude stockpiles for the week ended May 1 at 10:30 AM ET (14:30 GMT).

At 4:35 AM ET, U.S. crude June futures traded 3.3% higher at $25.36 a barrel. The international benchmark Brent contract rose 2.5% to $31.74.

Elsewhere, gold futures fell 0.2% to $1,708.05/oz, while EUR/USD traded at 1.0801, down 0.4%.

Europe Pushes Higher; Virus Optimism Rises

Europe Pushes Higher; Virus Optimism Rises

By Ritu,

Capital Sands

European stock markets posted strong gains Monday, helped by signs of a slowdown in coronavirus-related deaths in the region, and by expectations of more financial aid to help bolster its battered economies.

At 03:45 AM ET (0745 GMT), the U.K.’s FTSE index traded 2.6% higher, France’s CAC 40 was up 3.3%, while the DAX rose 3.9%. The broader-based Stoxx 600 Europe index climbed 2.6%.

The number of deaths has fallen in recent days in Italy and Spain, the two European countries worst hit, as well as in Germany, the region’s most populous country. The rate of new infections presents a more mixed picture, but has clearly slowed in Italy.

This news has raised hopes that the European continent may be on the road back to something approaching normality, although British Prime Minister Boris Johnson was taken to hospital on Sunday suffering from persistent coronavirus symptoms..

Eurozone finance ministry officials are set to hold discussions this week about how best to aid poorer states buckling under the coronavirus strain.

The subject of joint ‘coronabonds’ is sure to be raised again, but more likely options include credit lines from the euro zone’s bailout fund, more lending from the European Investment Bank and using a joint long-term budget directly for guarantees for leveraged borrowing.

In corporate news, shares in HSBC climbed 3% in the positive market despite Fitch Ratings downgrading its outlook to negative from stable. The agency kept its A+ long-term default rating.

Accor shares climbed over 5% after its chief executive stated the French hotel group has enough cash to operate through the coronavirus crisis. BMW shares rose 6.5% even after the carmaker reported a 20% drop in first-quarter sales.

On the flip side, Norwegian Air Shuttle shares fell 6% after the airline reported passenger volume fell by 60% year-on-year in March as it grounded more of its fleet amid global efforts to halt the spread of the novel coronavirus.

Oil prices edged lower as the OPEC+ group of major exporters delayed a meeting scheduled for later in the day to Thursday.

The announcement of the meeting, called last week to mediate a truce between Saudi Arabia and Russia in their ongoing price war, sent oil prices soaring last week.

At 2:45 AM ET, U.S. crude futures traded 1.3% lower at $27.98 a barrel. The international benchmark Brent contract fell 1.0% at $33.77.

Elsewhere, gold futures were 0.9% higher at $1,660.90/oz, while EUR/USD traded at 1.0817, up 0.1% on the day.

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.

Oil majors slash 2020 spending by 20% after prices slump

Oil majors slash 2020 spending by 20% after prices slump

By Ritu,

Capital Sands

The world’s biggest oil and gas companies are cutting spending this year following a collapse in oil prices driven by a slump in demand because of the coronavirus crisis and a price war between top exporters Saudi Arabia and Russia.

Cuts already announced by eight major oil companies, including Saudi Aramco and Royal Dutch Shell , come to a combined $28 billion, or a drop of 20% from their initial spending plans of $142 billion.

BP cut its 2020 spending plan by 25% and will reduce output from its U.S. shale oil and gas business, it said on Wednesday.

Exxon Mobil Corp  said it would cut capital expenditure but has not given specific figures as yet.

Brazilian oil company Petrobras said it was dialling back short-term production, delaying a dividend payment and trimming its 2020 investment plan, among other measures aimed at reducing costs in the face of the coronavirus pandemic.

Oil prices have slumped 65% since January to around $25 a barrel.

Investors say if the current crisis is prolonged, the spending cuts announced by major oil companies may not be enough to let them maintain dividends without adding to their already elevated levels of debt.

The combined debt of Chevron , Total, BP, Exxon Mobil and Royal Dutch Shell stood at $231 billion at the end of in 2019, just shy of the $235 billion hit in 2016 when oil prices also tumbled below $30 a barrel.

European shares inch higher but set for worst quarter since 2002

European shares inch higher but set for worst quarter since 2002

By Ritu,

Capital Sands

European stocks inched higher on Tuesday with investors buying into defensive sectors as they awaited further signs that the economy could weather the fallout from a near total global shutdown to curtail the spread of the coronavirus pandemic.

The pan-European STOXX 600 index  was up 1.1% at 0706 GMT, with real estate stocks , utilities  and telecoms  — usually considered stable during heightened volatility — adding between 0.9% and 1.5%.

Still, the benchmark index was set to end its worst quarter since 2002, with investor confidence far from stable amid a rout that erased more than $3 trillion from the value of European firms in just over a month.

In a bright spot, HelloFresh  jumped 12% to a record high after the German meal-kit delivery firm forecast first-quarter revenue above market expectations.

RBI may soon allow repurchase ops in corporate bonds

RBI may soon allow repurchase ops in corporate bonds

By Ritu,

Capital Sands

Indian authorities are considering allowing corporate bonds as collateral for repurchase operations as they seek to cool the recent spike in corporate borrowing costs in the wake of the coronavirus outbreak.

“We have to work it out. Under the RBI Act, we are not allowed to take any other collateral other than government securities. But we are not looking upon that as an impediment,” a senior official source with knowledge of the matter said.

“We will look at ways in which we can directly reach the corporates. We’re saying just give us time to work our way through these regulations and all, but we are indeed looking at directly helping them out,” he added.

The Indian authorities handling the matter, the Finance Ministry and Reserve Bank of India, both declined to comment on the story.

India has confirmed more than 350 cases of coronavirus, with seven deaths so far. Experts have said the number of cases reflect rates during the early stages of the outbreak in other countries, which then spiked sharply in subsequent weeks.

Dozens of districts across India have been put under lockdowns with train and bus services suspended in most places, causing panic among investors and sparking sell-offs in bonds, equities and the rupee, which hit fresh lifetime-low early on Monday.

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