Five Things You Need to Know to Start Your Day

(Bloomberg) --

Good morning. Stocks are falling, Europe is getting little respite and the global oil market is broken. Here’s what’s moving markets.

Brace

Stocks and oil are falling and the dollar is rising on Monday morning. If it hasn’t already been, it’s going to be a rocky ride in coming weeks. Markets are set to start pricing in what may prove to be a severe recession, yet this will be set against unprecedented stimulus. How this gets processed by investors and whether the lessons of 2008 were learned, we shall see. Elsewhere, the euro had its best week in more than a decade but with all the headwinds for the dollar now priced in, that could come under pressure. Bond investors have another dizzying week ahead and emerging markets are braced for what may be a very tough April, with a surge in virus cases anticipated and markets primed for an extra dose of turmoil.

No Respite

There was no respite for Europe over the weekend with warnings against loosening any lockdowns for now. Much attention will still be paid to attempting to decipher where on the curve each country is in terms of the virus toll. Deaths in the U.K. continue to rise and the government believes lockdown could last for some time, Spain reported its deadliest day and Italy has seen two successive daily declines. Hospitals in the latter two countries are being swamped with patients and Germany may be on the verge of key medical kit shortages.

Responses

U.S. President Donald Trump abruptly abandoned his previous goal of getting life back to normal by Easter, heeding the advice of his medical advisers, some of whom have warned the death toll in the U.S. could be very significant. A wave of new responses also arrived around the globe. China is pumping more money into its banking system, India has ordered states to quarantine workers and traders want more from its central bank after an emergency rate cut on Friday. The South African rand is sinking amid reports it could go to the International Monetary Fund for help, Indonesia is preparing for lockdown and Moscow has ordered residents to stay home.

Broken

Oil prices hit a 17-year low on Monday. Virus lockdowns across the world have driven demand for crude sharply lower, yet producers keep pumping, meaning the world is awash with oil that nobody wants just as two major producers engage in a price war. It has left many oil tankers full and pipeline operators have started asking companies to voluntarily cut their output because storage capacity is getting overwhelmed, while oil rigs are going dark at the quickest rate since 2015 and prices have gone negative in one corner of the market. Worryingly, it could be that the time for a coordinated response to boost prices has passed, meaning only the strongest producers will survive.

Coming Up…

The gold price has stabilized on Monday morning after its best week since 2008, with some of the supply chain tumult it had faced abating. German inflation, euro area economic confidence numbers and U.K. credit data will all arrive, albeit with the caveat that all data right now is set to be uniformly awful as it reflects the virus hit, so reading into it is somewhat less valuable. It’s pretty quiet on the earnings front, topped by U.K. water and waste firm Pennon Group Plc.

What We’ve Been Reading

This is what’s caught our eye over the past 24 hours. 

• A global consumer default wave is just starting.
• The golden age of the restaurant is over.
• Spy software in demand to monitor remote workers.
• “White elephant’’ soccer stadiums have found a new purpose.
• The climate challenge facing U.S. sugar farmers.
• A hand sanitizer maker is denied tariff relief.
• Some megachurches are still packing in crowds.

©2020 Bloomberg L.P.