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Bloomberg
Global stocks began the week on the back foot as investors readied for the start of an earnings season marked by unprecedented uncertainty over the corporate impact of the coronavirus pandemic. Oil pared earlier gains after a historic deal to cut output.
Futures on the three main US equity indexes all dropped, while stocks fell in Asia’s main financial centers. Markets across Europe were closed for the Easter holiday. Treasuries were mostly steady in Asia trading. The dollar dipped after Opec+ agreed to cut 9.7 million barrels a day from global crude output — just below the initial plan of 10 million.
The yen advanced and the euro rose to the highest level since early April. Seventy coronavirus vaccines are in development globally, with three already being tested in human trials, the World Health Organisation said.
With earnings season kicking off this week, investors will be hoping to get a sense of how bad the hit to global profits could be as the coronavirus upends the world’s economies. Without an effective therapy or a vaccine for the novel coronavirus, the US economy could face 18 months of rolling shutdowns as the outbreak recedes and flares up again, Federal Reserve Bank of Minneapolis President Neel Kashkari said.
US banks, financial firms begin reporting first-quarter earnings, led by JPMorgan, Citigroup, Bank of America, BlackRock, Goldman Sachs and Wells Fargo.
Futures on the S&P 500 Index fell 1.3% as of 8:11 am London time and Nasdaq 100 Index futures dipped 1.4%. The MSCI Asia Pacific Index declined 0.5%. While the Bloomberg Dollar Spot Index fell 0.3% to 1,243.25, the euro gained 0.2% to $1.0961.
The British pound climbed 0.5% to $1.2521 and the Japanese yen strengthened 0.6% to 107.83 per dollar. The South Korean Won weakened 0.7% to 1,217.82 per dollar.
West Texas Intermediate crude climbed 1.4% to $23.09 a barrel. While gold weakened 0.3% to $1,690.90 an ounce, iron ore gained 0.2% to $82.54 per metric ton.
Goldman says, US stocks likely bottomed on policy support
US stocks are unlikely to make fresh lows thanks to the “do whatever it takes†approach of policy makers, according to Goldman Sachs Group Inc.
A combination of unprecedented policy support and a flattening viral curve has “dramatically†cut risks to both markets and the American economy, strategists including David Kostin wrote in a note Monday. If the US doesn’t have a second surge in infections after the economy reopens, equity markets are unlikely to make new lows, they said.
“The Fed and Congress have precluded the prospect of a complete economic collapse,†the strategists wrote. “These policy actions mean our previous near-term downside of 2,000 is no longer likely†for the S&P 500 Index.
Goldman cited policy measures including rate cuts, the Federal Reserve’s Commercial Paper Funding Facility and fiscal stimulus such as the $2 trillion CARES act among the “numerous and increasingly powerful†actions that have spurred equity investors to take a risk-on view.