Morning Report – Tuesday 21st April

Main Headlines

WTI went negative for the first time as many storage tanks reached capacity. The May futures contract, which expires today, settled at minus $37.63 a barrel in New York. June’s contract settled at $20.43, with the gap between the two contracts the biggest ever by far. Significant production cuts are expected in the coming weeks.

Asian markets plunged with European equity futures and S&P 500 contracts reversing gains on concerns about the leadership of North Korea and its nuclear weapons amid reports Kim Jong Un is in critical condition after surgery. Benchmarks in Tokyo and Seoul slumped more than 2%. Treasuries rose as investors sought havens following more shock news from Trump, who said he’ll sign an executive order temporarily suspending immigration.

Virgin Australia became Asia’s first airline casualty of the coronavirus, calling in administrators after requests for state help failed. Deloitte will take control of Australia’s No. 2 airline, which has more than A$5 billion ($3.2 billion) in debt and hasn’t made a profit for seven years.

GBP

Deaths from the virus fell to the lowest daily tally in two weeks in the U.K.. The resumption of talks on Britain’s relationship with the EU post-Brexit should give some indication on where the pound will head next. Sterling may be in for more turbulence during talks over the future trading relationship especially given the U.K.’s refusal budge on an end-2020 deadline despite the ongoing crisis.

EUR

Hospitalisations in France fell a sixth day, and Italy saw the fewest new cases since March 10. Germany will add 15 billion euros to the federal budget to mitigate the pandemic’s economic damage. Speculators are still positioning for a rise in the Euro with no reward in sight.

USD

Trump said he’ll sign an executive order temporarily suspending immigration as a step to contain the virus. He said he did so “in light of the attack from the Invisible Enemy, as well as the need to protect the jobs of our GREAT American Citizens.” Mitch McConnell set a Senate vote on the latest rescue package for today, though snags remain over how to distribute assistance to states and what agency should oversee testing. The Federal Reserve slowed the pace of bond purchases under its quantitative easing program. It purchased roughly $30bn per day last week compared to $15bn per day this week. The dollar has benefitted on risk aversion.

Main Economic Data/Central Banks/Government (All Times BST)

• 7:00 a.m.: U.K. Feb. unemployment, March claimant count
• 9:00 a.m.: Spain Feb. trade balance
• 10:00 a.m.: Germany, Euro-Area April ZEW Survey
• U.K. Parliament returns from recess
• Quarterly production report: Oil Search

Corporate Events

Earnings include Coca-Cola, Netflix, SAP, Philip Morris, Lockheed Martin, Texas Instruments, Prologis, Chubb, Associated British Foods.