Disturbing News on Market, Economic, Medical and Social Fronts
April 20, 2020
The price of West Texas Intermediate crude oil collapsed under the weight of exhausted storage capacity and plunging demand. At its overnight low of $11.04 per barrel, the price was down 39% on the day and by more than 80% from its 52-week high. It’s also the lowest since the first quarter of 1999 during the Asian debt crisis.
Stock markets in Europe show losses so far today of 2.2% in Spain, 1.5% in Italy, Germany, and France and 1.2% in Great Britain. Equities also fell 2.5% in Australia, 1.3% in Indonesia, and 1.2% in Japan.
A further sign of market distress can be seen in the sharp increase of 10-year sovereign debt yields among Mediterranean economies like Spain, Greece, Italy, and Portugal – each of which is up at least 9 basis points.
Renewed safe-haven buying has lifted the dollar by 1.8% against the peso, 0.7% relative to the loonie, 0.6% versus sterling, 0.2% vis-a-vis the Australian dollar and yen and 0.1% against the euro and Swiss franc.
The Covid-19 pandemic has mushroomed to 2,42 3,498 worldwide cases resulting in over 166K deaths, of which nearly a quarter have been in the United States. New York alone accounts for over 10% of global coronavirus-related deaths.
Instead of pulling America together against a common foe, the health crisis has added another front to the country’s political wars, with street protests against social distancing regulations that have grounded whole industries.
The private sector’s slump in aggregate demand is not getting adequately compensated by fiscal stimulus, and inflation reports out today show a decline in price pressure.
- CPI inflation in Portugal fell to -3.4% in March, their tenth negative level in a row and the greatest deflation in 42 months.
- German PPI inflation also dropped to a 42-month low of -0.8% in March. Energy costs were 4.7% lower than a year earlier.
- Britain’s rightmove house price index fell 0.2% on month in April, resulting in a one percentage point on-year decline to a 4-month low of 2.5%.
New Zealand CPI inflation, defying the trend elsewhere, accelerated to 2.5% last quarter, most since the third quarter of 2011.
Japan and Euroland released trade statistics. Japan’s seasonally adjusted customs trade balance, which swung to a surplus in February for the first time since mid-2018, swung back to a deficit of JPY 190 billion, the most in ten months. Imports increased 7.2% on month, while exports sank 4.1%. Export volumes compared to March 2019 were down by 15.9% versus the United States, 10.5% versus Asia, and 9.1% to the European Union. Euroland’s unadjusted trade surplus of EUR 23.0 billion in February was 24.3% wider than a year earlier; on a seasonally adjusted basis, the surplus widened by EUR 6.6 billion on month as exports climbed 1.8% while imports fell 2.5%.
Euroland’s seasonally adjusted current account surplus widened 15% on month in February to EUR 40.2 billion, its greatest level since at least 2008. Over the 12 latest reported months, the surplus equaled 2.8% of GDP.
Italy’s current account surplus of EUR 4.783 billion in February was more than twice the size of the year-earlier surplus of EUR 2.143 billion.
Unemployment in Hong Kong rose half a percentage point in March to a 113-month high of 4.2%.
Polish on-year growth in jobs slowed from 2.6% in December 2019 to 1.1% in February and a 73-month low of 0.3%.
The People’s Bank of China cut the one-year Loan Prime Rate by 20 basis points to 3.85%. The size of the reduction matched market expectations and was the second such adjustment this year after a 20-basis point decline in February.
Copyright 2020, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: COVID-19, German PPI, Japanese trade balance, oil price collapse, Peoples Bank of China
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