Morning Report – Wednesday 22nd April

Main Headlines

Brent futures dropped 16% to the lowest since June 1999 amid persistent concerns about the glut. WTI also extended losses after U.S. regulators delayed a decision on output cuts. Volatility ruled as oil collapsed, with Asian markets tracking losses on Wall Street. The Aussie jumped after better-than-expected retail sales data, while the won slid as questions swirl about Kim Jong Un’s health. Gold and industrial metals fell. Treasuries extended gains.

GBP

Britain will likely sell 270 billion pounds of gilts this fiscal year to meet soaring spending needs related to the outbreak. At that rate, issuance volume would set a new record. Still, the market has support from the BOE’s QE program, so yields will likely remain capped. Sterling was on the defensive yesterday as talks between the U.K. and Europe resume over the future trading relationship – a process already troubled by the U.K.’s refusal to budge on an end-2020 deadline despite the coronavirus crisis. The concern is that the final divorce terms will be messy.

EUR

France saw the number of patients in ICUs fall to the lowest in three weeks, while new deaths declined. Recoveries in Italy almost surpassed new cases for the first time. ECB policy makers will hold a call this evening to discuss whether to accept junk-rated debt as collateral from lenders, people familiar said. The move may be intended to pre-empt concerns some sovereign and corporate bonds will soon be downgraded due to fiscal burdens related to the pandemic. The euro pared losses amid reports Italian Prime Minister Giuseppe Conte said the nation will work with the European Union on a new ESM credit line.

USD

The Senate passed a $484 billion deal that will restock an exhausted small business aid program and provide more funds for virus testing and hospitals. The House is set to vote on the measure tomorrow, and Trump has said he would sign it. It includes $320 billion for the PPP meant to help small businesses keep workers employed. The deal comes as new infections in the U.S. rose by the most in almost three weeks, although the White House health adviser said most major metropolitan areas were seeing improvements. The dollar extended gains on risk aversion.

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

• 7:00 a.m.: U.K. March CPI, RPI, PPI
• 9:00 a.m.: Italy Feb. Industrial Orders
• 9:30 a.m.: U.K. Feb. House Price Index
• 10:00 a.m.: Euro-Area 2019 Government Debt/GDP Ratio
• 10:00 a.m.: U.K. sells bonds
• 11:30 a.m.: U.K. sells bonds
• 12:00 p.m.: Turkey Rate Decision
• 2:00 p.m.: Russia March Industrial Production
• 3:00 p.m.: Euro-Area April Consumer Confidence

Corporate Events

Earnings include Heineken, Ericsson, STMicro, AT&T, Thermo Fisher, Biogen.

Earnings Highlights

Netflix adds almost 16 million users, crushing estimates.
Texas Instruments sales beat, says it will use “2008 financial crisis to model” its outlook.
Snap sales, daily users top projections; company doesn’t give forecast.
Chipotle, Lyft and Philip Morris all withdrew their full year guidance.
Coca-Cola says results can’t be estimated and reported first-quarter comparable EPS that beat.