Five Things You Need to Know to Start Your Day
Five Things You Need to Know to Start Your Day
(Bloomberg) --
Good morning. Donald Trump is restricting travel from Europe, the virus is officially a pandemic and the European Central Bank is meeting. Here’s what’s moving markets.
Travel Ban
U.S. President Donald Trump said he’ll restrict travel from Europe for 30 days in an attempt to stem the spread of coronavirus, a promise made during an error-laden address on an outbreak he called a “foreign virus” and which has spooked investors. Stocks are set to plummet once again and haven assets will continue to benefit. And all after it had been made official: The World Health Organization declared the coronavirus outbreak is now a pandemic amid the ongoing surge in cases outside of the origin point in China and urged governments around the world to do more to contain the spread.
ECB Day
Against that backdrop, the European Central Bank takes its place at center stage of the global monetary policy response to the virus. ECB President Christine Lagarde said the bank is considering all tools at its disposal but has made clear that any moves the bank makes will have to be combined with a bout of stimulus from European governments in order to be effective, the prospect of which does seem to be improving. That said, the U.K. combined a Bank of England rate cut with a big hike in fiscal spending pledges and got pretty muted responses in both bond and stock markets.
Oil
Yes, there is a price-war going on in oil which continues to hit crude prices, in combination with Trump’s travel restrictions, and which appears to have escalated further with both Russia and Saudi Arabia flooding the market with supply. But there's much more to note about the situation. U.S. oil output is set to fall next year for the first time since 2016, exchange-traded funds are rushing into energy stocks on the hope of a bailout following the chaos and Nigerian bond yields are surging. The big winners? Oil traders. And there's a silver lining to the crude drop for the mining industry, too.
Chaos
The predictions amid all this are not rosy. The bull market is ending as it begun, in chaos. The selloff set to follow Trump’s address demonstrates concern that governments can’t save markets and GDP estimates are starting to turn negative. One asset manager thinks equity markets are being overly complacent and could fall more on the virus hit. One Swiss bank thinks there are opportunities in stocks, another says it’s too early to call a bottom. Some think the bond market gloom is overdone, others see junk investors pulling cash at a record rate. And all the while, the gold rush continues.
Coming Up…
U.K. Prime Minister Boris Johnson is set to speak on plans to try to slow the spread of coronavirus and Premier League soccer games could be played behind closed doors. Things are pretty light on the data front, with some housing data in the U.K. and industrial production for the euro area. Cineworld Group Plc, the cinema operator, will be closely watched after it heavy plunge in recent weeks on virus-related concerns and the postponement of the latest James Bond movie.
What We’ve Been Reading
This is what’s caught our eye over the past 24 hours.
- The virus is opening up a new front in the war on cash.
- U.S. data could get less reliable.
- Don't ask employees if they have coronavirus.
- COVID-19 could make gender inequality worse.
- Italian saga of quarantine to quarantine.
- Giving consumers a right-to-repair.
- Harvey Weinstein is going to prison.
©2020 Bloomberg L.P.