Five Things You Need to Know to Start Your Day
Get up to date on what's moving global markets this morning.
(Bloomberg) --
A potential Covid-19 vaccine begins human testing, as Trump tells Americans to avoid gatherings of over 10 people. Markets are set for another wild day after U.S. stocks take the biggest plunge since 1987. And most airlines could go bankrupt by May if governments don’t step in to help, CAPA warns. Here are some of the things people in markets are talking about today.
A potential Covid-19 vaccine moved into human testing, with the first participant received the investigational treatment Monday. That’s a record pace for a virus scientists didn’t know existed a few months ago. Meanwhile, in his most drastic piece of advice yet to Americans, President Donald Trump said the nation should avoid gathering in groups of more than 10 people and should stop eating out at restaurants and bars. Still, the San Francisco Bay Area went further, requiring people to stay home except for essential needs, while Canada shut its border to most foreigners. Elsewhere, Malaysia is severely restricting people’s movement nationwide to limit the spread of the coronavirus as the nation grapples with the most confirmed cases in Southeast Asia. And Hong Kong, the world’s most expensive property market, is going to start charging people quarantined in government housing after it found some were abusing the system. It’s not all bad news though. On the testing front, a new 10-minute coronavirus test for $1 may be a total game-changer, and the G7 announced they will do “whatever is necessary” to ensure a globally coordinated response to the pandemic and its economic fallout. Here’s how Bloomberg has mapped out the virus.
The stomach-turning ride in global financial markets showed no signs of easing in Asia after U.S. stocks plunged the most since 1987. Futures pointed to declines of as much as 4% in Tokyo and Sydney, with Hong Kong contracts also lower after the S&P 500 Index sank 12% and erased its gain for 2019. U.S. stocks extended losses as Trump said the economy could fall into a recession. Central bank stimulus around the world failed to mollify investors worried about the damage the coronavirus is inflicting on economies. Treasuries rallied, crude oil plunged almost 10% and the yen climbed.
Over the past week, the Federal Reserve has hit theU.S. dollar funding markets with a barrage of liquidity and tools to ensure they remain lubricated. Yet indicators of funding stress are still showing pressure. In an emergency action Sunday, the central bank slashed interest rates to zero, adjusted the parameters of global dollar swap lines, in additional to offering trillions of dollars of liquidity via operations for repurchase agreements. From the repo market to cross-currency basis swaps, here’s what some of the key metrics have to say about the level of distress in the financial system.
As Australia’s central bank gears up to unleash quantitative easing as early as Thursday, investors are scrambling to map out further measures that may accompany its debt purchases. The nation’s 10-year sovereign yield dropped as much as 16 basis points after the Reserve Bank of Australia flagged it was prepared to buy government bonds to support the coronavirus-hit economy. Some market watchers expect the measures will cover more than just traditional bonds. Others think yield-curve targeting will be the RBA’s preferred tool. Here is a selection of their views. Meanwhile the Australian government is preparing to scale up fiscal stimulus just days after announcing a A$17.6 billion ($10.7 billion) support package as it seeks to save businesses and jobs from the impact of the coronavirus.
The coronavirus pandemic will bankrupt most airlines worldwide by the end of May unless governments and the industry take coordinated steps to avoid such a situation, an aviation consultant warned. Many airlines have probably been driven into technical bankruptcy or substantially breached debt covenants already, Sydney-based consultancy CAPA Centre for Aviation warned in a statement Monday. Carriers are depleting cash reserves quickly because their planes are grounded and those that aren’t are flying more than half empty, it said. “Coordinated government and industry action is needed — now — if catastrophe is to be avoided,” CAPA said. Airlines have been among the biggest corporate casualties of the virus outbreak as the coronavirus grinds air traffic to a halt. Carriers from American Airlines to Australia’s Qantas Airways have slashed capacity, while some like Sweden’s SAS have temporarily laid off most staff. Flybe, Europe’s biggest regional airline, has already collapsed. In fact, carriers could face as much as $113 billion in lost revenue this year, according to the International Air Transport Association. And in other travel-related news, hotel owners aren't much better off.
What We’ve Been Reading
This is what’s caught our eye over the past 24 hours.
- North Korea’s official virus tally is zero. Experts aren’t so sure.
- Family offices chasing $64 trillion are finally making inroads in China.
- Depositors staying put is now key to India’s biggest bank rescue.
- Doctors are fearing being taken out of the game if they get infected by patients.
- Airfares soar 174% as Chinese rush to escape the virus in Europe.
- Russia just approved amendments that could extend Putin’s rule for another 12 years.
To contact the editor responsible for this story: Alyssa McDonald at amcdonald61@bloomberg.net
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