Morning Report – Wednesday 15th April

Main Headlines

Trump has temporarily cut off funding to the WHO, accusing it of taking China’s claims about the virus “at face value” and failing to share information promptly. Democrats called it a desperate attempt to deflect blame. The U.S. contributed almost $900 million to the organisation’s operations in its current two-year funding cycle. Separately, the president backtracked on yesterdays comments and said governors would decide if states should reopen before federal social distancing guidelines expire.

Gold traded near the highest close in more than seven years, supported by predictions for the deepest global recession in generations; expectations for prolonged, debt-fuelled intervention by central banks and governments; and another charge by investors into bullion-backed funds.

Investors tilted to the side of safety ahead of earnings that will likely show more companies joining the big banks in getting hammered from the pandemic. U.S. and European stock futures are slightly lower this morning, while Treasuries and the yen climbed. Asian shares were mixed, though benchmarks in New Zealand and India jumped. The Aussie and Kiwi dollars slumped as Oil fell 10%. China cut interest rates and injected $14 billion into the financial system. Data Thursday are expected to show the economy contracted by 6% in the first quarter versus a year earlier.

GBP

Sterling is looking like it could be an unlikely benefactor from Europe’s virus troubles. COVID-19 has blown Brexit out of the headlines and one school of thought is that the pandemic could mean that the deadline for a trade deal this year could either be pushed back, delaying a risk for the currency, or seeing more favourable terms given to the U.K. That would mark a change of fortunes for a Sterling which has suffered a pronounced sell-off since the decision to leave the EU and again after the virus forced a lockdown in London. Against the dollar, sterling touched the lowest level in 35 years last month (1.1412) and has since recovered over 10% since.

EUR

The Euro is steady on signs the coronavirus pandemic could be starting to ease, however, downside risks remain whilst it struggles to reach an agreement over what kind of emergency support it should give economies worst hit by the virus. While Italy and France want some sort of joint bond issuance, Germany and the Netherlands are reluctant to agree, leaving the European Central Bank to provide support.

USD

Despite Trump’s pledge to let governors decide, federal health officials are drafting plans to end social-distancing measures and reopen businesses, the Washington Post reported. The document describes a phased program that splits the country into regions based on risk levels. Low-risk areas could open first, no earlier than May 1.

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

• 7:45 a.m.: France March CPI
• 8:00 a.m.: Spain March CPI
• 9:00 a.m.: Italy March CPI
• 1:30 p.m.: U.S. March retail sales
• 2:15 p.m.: U.S. March industrial production
• 3:30 p.m.: EIA U.S. Crude Oil Inventory Report
• 7:00 p.m.: Fed’s Beige Book

Corporate Events

Earnings include BofA, Citi, Goldman, UnitedHealth, ASML, US Bancorp, Wipro.