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Five Things You Need to Know to Start Your Day
(Bloomberg) --
Good morning. Europe is starting to tentatively ease lockdown restrictions, it’s a big week for central banks and airline bailouts are beginning. Here’s what’s moving markets.
Tentative Easing
Some of the European nations hit hardest by Covid-19 have started to make tentative steps to reopen their economies. Spain is seeking to ease restrictions to allow outdoor exercise and walks, Italy will start to allow people limited movement and plans from France are due to be outlined on Tuesday. Germany is warning against easing lockdown measures too early, as is the U.K.. Prime Minister Boris Johnson is due to go back to work, while the country is also planning to roll out mobile testing units and has been advised by one expert to consider a South Korean model.
Central Banks
The U.S. Federal Reserve and the European Central Bank are due to meet this week amid ongoing pressure on policymakers to continue supporting economies and with some bond investors concerned that the U.S. is heading into a deflationary spiral. China's central bank intends to provide liquidity and ongoing support to ensure the pandemic-driven downturn is short-lived, and the Bank of Japan has pledged unlimited bond buying as it ramps up stimulus. For Europe, this would go hand-in-hand with a recovery fund from the European Union, which one commissioner said should be worth around $1.6 trillion.
Rescues
The shape and size of the bailout packages for European airlines is starting to become clearer as the French and Dutch governments pledged 11 billion euros for Air France-KLM and with Germany’s Deutsche Lufthansa AG heading into a key week of talks regarding what is likely to be a similar-sized rescue. It’s a familiar story for an airline industry battered by lockdown measures, with Richard Branson considering injecting more money into Virgin Atlantic Airways Ltd., Emirates dipping into its cash reserves and plane manufacturer Airbus SE warning it is bleeding cash and will have to cut costs quickly to cope in a shrinking global aviation market.
Supply Chains
The world's largest wheat shipper, Russia, has hit its self-imposed quota on grain exports two months ahead of schedule, raising the prospect that countries are shut off from Russian wheat for the first time in a decade and at a time when demand is sky-high. It marks another potential rupture in global supply chains which have already shifted into survival mode. Add to this that the Rhine river is drying out, raising the potential that industrial goods will find it tougher to make it to their destination, and the likelihood that swathes of the global oil market are going to shut down.
Coming Up…
Global stocks are seeing gains going into the new week, with European and U.S. futures higher on positive developments in the virus battle and after the Bank of Japan’s stimulus package. European economic data is relatively thin on the ground, but note Chinese industrial profit slumped by more than a third in March. Earnings today include numbers from German sportswear giant Adidas AG and health care and chemicals conglomerate Bayer AG, while Deutsche Bank AG said its results are set to top expectations. And oil prices are are sinking again as markets weigh the glut of crude currently overshadowing the market.
What We’ve Been Reading
This is what’s caught our eye over the past 24 hours.
- 20 minutes that broke the U.S. oil market.
- Avocados are in for the pandemic diet.
- The company chasing podcast gold.
- Lamenting the closure of British pubs.
- Citigroup’s elevator quandary.
- Independent bookstores get creative to survive.
- Why smart companies are playing dumb.
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