The Global Markets This Week

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Contents

Markets & Finance News

Futures surge on early signs of coronavirus slowdown in hot spots

U.S. stock index futures bounced for a second straight day on Tuesday as risk appetite returned on tentative signs the coronavirus outbreak was starting to plateau in hard-hit U.S. states. All three major indexes rallied more than 7% on Monday after the governors of New York and New Jersey said their states, hot spots of the COVID-19 disease, were showing early signs of a “flattening” of the outbreak.

Regional Markets News

United States Europe & Middle East Asia Pacific

Deals of the day-Mergers and acquisitions

The following bids, mergers, acquisitions and disposals were reported by 1000 GMT on Tuesday:

UK minister Gove is self isolating as family member has COVID-19 symptoms – ITV

British Cabinet Office Minister Michael Gove is self isolating as a member of his family is displaying COVID-19 symptoms, an ITV reporter said.

US STOCKS-Futures surge on early signs of coronavirus slowdown in hot spots

U.S. stock index futures bounced for a second straight day on Tuesday as risk appetite returned on tentative signs the coronavirus outbreak was starting to plateau in hard-hit U.S. states.

Euro zone to agree on half trillion-euro package against coronavirus

Euro zone finance ministers are likely to agree on Tuesday on measures worth more than half a trillion euros to fight the economic fallout of the coronavirus epidemic, but say that plans to jointly issue debt will need more talks.

UPDATE 5-Japan declares coronavirus emergency, approves near $1 trln stimulus

* Spending roughly 7% funded by record additional bond issuance

FOREX-Dollar falls, riskier currencies rally on virus lockdown hopes

The dollar lost ground on Tuesday as riskier currencies rebounded on tentative hopes that lockdowns may be slowing the spread of the coronavirus in some countries.

CEE MARKETS-Forint leads FX rise as Hungary central bank readies more firepower

The forint led a jump in central Europe’s currencies on Tuesday as investor hopes that the corovavirus spread could start to level out boosted riskier assets while Hungary’s markets awaited further central bank measures to manage the outbreak. Hungary’s central bank said it would hold an online news conference at 1200 GMT on Tuesday, with analysts saying it could unveil new measures to kickstart the economy. H

Japan’s govt approves emergency stimulus package to combat coronavirus

Japan’s government approved an emergency economic stimulus package worth 108.2 trillion yen ($993 billion), with fiscal spending of 39.5 trillion yen, aimed at battling the deepening fallout from the coronavirus, government officials said on Tuesday.

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China’s volume-weighted average of overnight repo falls to record low

China’s primary money market rates fell sharply on Tuesday, with the overnight borrowing cost hitting a record low as liquidity in the banking system remained ample and the central bank announced easing measures to combat coronavirus disruption.

Infineon says Cypress takeover cleared, funding in place

Infineon Technologies said on Tuesday that it had received final regulator clearance for its takeover of U.S. Cypress Semiconductor and that funding was in place to complete the deal.

European shares climb on signs of waning coronavirus cases

European shares rallied for a second straight day on Tuesday with investors focusing on early signs that the coronavirus pandemic may be easing, even as major companies took steps to shore up cash.

UPDATE 1-European shares climb on signs of waning coronavirus cases

* Cineworld, Thales, Lufthansa jump on liquidity plans (Adds comments, details; updates prices)

European shares climb as coronavirus cases slow

European shares rallied for a second straight day on Tuesday, with investors focusing on early signs that the coronavirus pandemic may be easing, even as major companies still take steps to shore up cash after lockdowns crushed global demand.

European shares jump as coronavirus deaths slow, Germany up almost 6%

German shares jumped 5.8% on Monday to lead a strong bounce in European shares as a slowdown in coronavirus deaths raised hopes that nationwide lockdowns may gradually be eased.

UPDATE 4-European shares jump as coronavirus deaths slow, Germany up almost 6%

* Analysts expect European earnings recession to deepen in 2020 (Updates to close)

European shares jump as coronavirus deaths slow

European shares rebounded on Monday as a slowdown in coronavirus deaths in France and Italy raised hopes that sweeping lockdowns were starting to show results.

European stock index futures jump as coronavirus death toll slows

European stock index futures jumped more than 4% on Monday as a slowdown in coronavirus death toll in France and Italy raised hopes that lockdown measures were starting to show results.

European stocks end lower as COVID-19 economic toll becomes clearer

European shares ended down on Friday, closing the week lower as dismal business activity data heralded a deep economic and earnings recession due to the novel coronavirus outbreak.

UPDATE 2-European stocks end lower as COVID-19 economic toll becomes clearer

* Insurers the biggest drag amid calls for a freeze in dividends

European shares dip as corporate pain from coronavirus outbreak grows

European stock markets headed lower on Friday, erasing meagre gains for the week, as more companies flagged a hit to business from the coronavirus pandemic, foreshadowing a deeper earnings recession ahead of the reporting season.

GLOBAL MARKETS-Coronavirus hopes propel stocks, euro higher

World stock markets enjoyed a second day of sharp gains on Tuesday as signs of progress against the coronavirus in both Europe and the United States and more liberal helpings of stimulus kept investors charging back in.

EMERGING MARKETS-Stocks, FX firm on hopes of plateau in coronavirus spread

Emerging market stocks and currencies extended gains on Tuesday as the continued tapering of the coronavirus’ toll in certain European and U.S. hotspots led many to cautiously believe the pandemic may have peaked.

UPDATE 2-Australia’s cenbank warns of ‘very large’ GDP slump, keeps record low rates

Australia’s central bank kept rates at record lows on Tuesday and pledged to keep three-year government bond yields at its 0.25% target as it predicted the coronavirus pandemic would trigger a massive economic decline.

GLOBAL MARKETS-Asian shares cautiously gain on hopes virus is slowing, dollar slips

Asian stock markets rallied for a second day on Tuesday and riskier currencies rose, on tentative signs the coronavirus crisis may be levelling off in New York and receding in Europe.

Tokyo stocks rise to 1 week high on hopes of coronavirus slowdown, Wall St rally

Tokyo shares advanced on Tuesday, supported by tentative signs of the coronavirus outbreak being contained in New York and other global hot spots, with long-only investors still awaiting details of Japan’s massive economic stimulus package.

FOREX-Dollar dips as pandemic worries persist despite some signs of hope

The dollar fell against the yen on Tuesday as underlying concerns about the economic shock wrought by the coronavirus crisis kept many investors on edge.

Japanese stocks rise to a week’s high on hopes of coronavirus slowdown, Wall St rally

Tokyo shares gained on Tuesday, supported by tentative signs of the coronavirus crisis likely levelling off in New York and other global hot spots, with long-only investors still awaiting details of Japan’s massive economic stimulus package.

FOREX-Dollar dips as virus worries persist despite some signs of hope

The dollar fell against the yen on Tuesday as U.S. stock futures erased gains and traded lower in a sign some investors remain concerned about the economic shock posed by the coronavirus pandemic.

Morning News Call – India, April 7

To access a PDF version of this newsletter, please click here http://share.thomsonreuters.com/assets/newsletters/Indiamorning/MNC_IN_04072020.pdf If you would like to receive this newsletter via email, please register at: http://solutions.refinitiv.com/MNCIndiaSubscriptionpage FACTORS TO WATCH No moajor events are scheduled for the day. LIVECHAT – FRONTIER MARKETS IN FOCUS Charles Robertson, Global Chief Economist and Head of Macro Strategy at Renaissance Capital, discusses frontier markets at 4:30 pm IST. To join the conversation, click on the link: https://refini.tv/2P8N0Wp INDIA TOP NEWS • Testing times for India in race to head off coronavirus epidemic India, like a lot of countries plunged into crisis by the pandemic, is struggling to ramp up testing for the coronavirus, but in few places would the odds of containing the disease appear so bleak should domestic transmission start to multiply. • India’s March services activity contracts amid coronavirus disruptions India’s dominant services sector, the lifeblood for economic growth and jobs, contracted in March as new business and export demand fell sharply as the coronavirus pandemic wreaked havoc globally, a private survey showed. • India lifts restrictions on 24 drug exports amid coronavirus India, the world’s main supplier of generic drugs, has lifted restrictions on the export of 24 pharmaceutical ingredients and medicines made from them, the government said in a statement. • Odd number in India coronavirus testing data sparks questions A statistical oddity in India’s new coronavirus testing numbers has sparked questions about the country’s data management. • “Don’t target doctors”: Indian medics say coronavirus critics being muzzled Indian authorities are facing growing complaints from doctors who say their criticism of the response to the coronavirus outbreak and a lack of protective gear is being muzzled. GLOBAL TOP NEWS • UK’s Johnson fights worsening coronavirus symptoms in intensive care British Prime Minister Boris Johnson was being treated for worsening coronavirus symptoms in an intensive care unit, with his foreign minister deputising for him as the nation tackles the COVID-19 crisis. • OPEC+ likely to agree to cut production if U.S. joins effort – sources Major oil producers including Saudi Arabia and Russia are likely to agree to cut production at a Thursday meeting but only if the United States joins the effort, aimed at coping with the disastrous effect of the coronavirus on fuel demand, three OPEC+ sources told Reuters on Monday. • Japan set to announce coronavirus emergency, finalise near $1 trillion stimulus Japanese Prime Minister Shinzo Abe is set to announce a state of emergency for the capital Tokyo and six other prefectures to stem a worrying rise in coronavirus infections in major population centres. LOCAL MARKETS OUTLOOK (As reported by NewsRise) • SGX Nifty nearest-month futures were trading 4.7% higher at 8,486.00. • The Indian rupee is expected to rise against the dollar after U.S. equities surged amid hopes that the coronavirus outbreak peaked in major European countries. • India’s federal government bonds are likely to edge lower in early trade ahead of a fresh supply of state notes today. The yield on the benchmark 6.45% bond maturing in 2029 is likely to trade in a range of 6.29%-6.38% today, a trader with a state-run bank said. GLOBAL MARKETS • U.S. stocks rocketed higher on Monday, with each of the major indexes rallying at least 7%, after a fall in the daily death toll in New York, the country’s biggest coronavirus hot spot, fueled optimism a leveling off of the pandemic was on the horizon. • Asian stock markets rallied for a second day, and riskier currencies rose, buoyed by tentative signs the coronavirus crisis may be levelling off in New York and receding in Europe. • The pound edged lower against the dollar and the euro after British Prime Minister Boris Johnson was moved to intensive care after his coronavirus symptoms worsened. • U.S. Treasury yields rose on Monday as stocks rallied on hopes the coronavirus health crisis may be slowing, with hard-hit New York and New Jersey eying possible plateaus. • Oil rose amid hopes that the world’s biggest producers of crude will agree to curtail production as the coronavirus pandemic ravages the global economy, even as analysts cautioned the cuts may do little to boost demand. • Gold prices eased from a four-week high, as the U.S. dollar and global equities strengthened on signs of a slowdown in coronavirus-related deaths. CLOSE FII INVESTMENTS EQUITIES DEBT PNDF spot 75.97/76 April 3 (3,801.61) crore (2,823.95) crore 10-yr bond yield 6.3% Month-to-date (3,802) crore (2,824) crore Year-to-date (51,832) crore (72,751) crore (FII investment numbers are in Indian rupees. Source: National Securities Depository Limited)​ For additional data: India govt bond market volumes Stock market reports Non-deliverable forwards data Corporate debt stories [IN CORPD] Local market closing/intraday levels [IN SNAPSHOT] Monthly inflows [INFLOWS RTRS TABLE IN] ($1 = 75.96 Indian rupees) (Compiled by Swathi Nair in Bengaluru.)

GLOBAL MARKETS-Asian shares cautiously gain on virus hopes, dollar slips

Asian stock markets rallied for a second day on Tuesday, and riskier currencies rose, buoyed by tentative signs the coronavirus crisis may be levelling off in New York and receding in Europe.

Bloomberg

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Weekly Market Update (March 30 – April 03, 2020)

Stocks declined last week amid soft economic data and the extension of social-distancing guidelines. Oil surged 32% on prospects of a global deal to cut output and support prices, but the positive sentiment was undercut by the release of regional economic activity surveys that signal a sharp decline in global growth 1 . Employment indicators also showed stress in the labor market, with the U.S. economy losing 700,000 jobs in March and unemployment rising from record lows. With 10 million Americans filing for unemployment benefits in the last two weeks, unemployment will likely continue to rise in the coming months. In this uncertain environment we recommend investors consider systematic investing* and rebalancing instead of trying to time the bottom.

Recessions and Markets: What You Need to Know

The stock market response to efforts to contain the global coronavirus pandemic was sharp and rapid. However, the magnitude of the economic impact of these efforts to contain the virus, through social distancing and business closures, is just starting to take shape. Stocks ended the first quarter of 2020 down 20%, the worst quarter since the 2008 financial crisis 1 . With an economic downturn in the first half of the year becoming increasingly certain, here are answers to four key investor questions about recession.

What is a recession, and are we in one now?

Technically a recession is defined by two sequential quarters of contraction in the gross domestic product (GDP). The rapid onslaught of the coronavirus pandemic as both a health crisis and a global economic shock has shortened this timeline. It is already clear that the economy is near or in recession. For evidence, look no further than the jobs market, once a bright spot of the economy, is now showing the toll of the coronavirus impact. In just the last two weeks, 10 million Americans applied for unemployment benefits. During the 2008 Great Recession it took 28 weeks to reach 10 million claims 2 .

The March jobs report released last week showed the first declines in job hiring since 2020, a staggering loss of 701,000 jobs after posting a healthy 283,000 jobs just one month earlier. The unemployment rate increased sharply to 4.4%, from a half century low of 3.5% 3 . While the declining job growth was not a surprise, the magnitude was greater than analyst expectations because 1) most of the data was collected before widespread efforts to contain the virus through social distancing were adopted by state and local governments, and 2) while two-thirds of the job losses were in vulnerable industries with high social contact like hospitality, retail and restaurants, sizable losses were also found in now-critical industries like health care, which saw 61,200 layoffs 3 .

We expect losses to continue in April as social-distancing measures continue to ramp up. During the 2008 recession the unemployment rate reached 10%, and we may see rates surpass this range temporarily until the economy reopens and economic activity resumes 2 .

How long will the recession last?

Though every recession is unique, there are often common triggers, like inflation being too high or asset bubbles that lead to economic downturns. Recessions tend to be short-lived, lasting about 11 months on average. In fact, since 1954 the economy has expanded seven months for every one month of contraction. The makeup of the COVID-19 recession is different than previous episodes. The economy was solid before the pandemic took shape – unemployment was low, inflation was well-contained near the Fed’s 2% threshold, and there was no threat of an imminent asset bubble.

The table below compares economic indicators in the month prior to the onslaught of a recession with the most recent economic data. The unemployment rate was at a 50-year low, and the household savings rate was 8.2% in February. That’s double the rate of savings before the 2008 recession, which will help consumers better weather the economic downturn than if savings rates were lower prior to the recession. Inflation is also more moderate now than it was in previous recessions. That means that the Federal Reserve has the latitude it needs to keep interest rates near zero until the economy recovers and an expansion takes hold.

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