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Five Things You Need to Know to Start Your Day

Five Things You Need to Know to Start Your Day

(Bloomberg) --

Good morning. Investors are trying to predict when coronavirus cases will peak and how deep the economic recession will be, just as governments ramp up their response measures. Here’s what’s moving markets.

Peak Speculation

Market participants are racing to predict the peak of coronavirus infections in Europe, after the region replaced China as the epicenter of the pandemic. In the darkest days of 2003’s SARS epidemic, markets troughed shortly after infection rates peaked. JPMorgan sees potential for Italy’s active case count to peak during the next seven days. RBC, meanwhile, still sees Italy's outbreak in a fast-growth phase, but points out that China’s case rate slowed down around day 25; it’s day 27 in Italy.

Sizing Up

With many economists agreeing that a global recession is coming, the debate has turned to how deep the slump will be. Morgan Stanley expects growth this year to fall to 0.9%, while Goldman Sachs predicts a weakening to 1.25%. Such numbers would not be as painful as the 0.8% contraction of 2009, as measured by the International Monetary Fund, but they would be worse than those of 2001 and the early 1990s. Perhaps unsurprisingly, investor confidence in Europe’s biggest economy has plummeted to levels last seen during the sovereign debt crisis.
 

Wartime-Like Spending 

More European nations are outlining their responses to the health crisis. The Spanish government will provide 100 billion euros ($110 billion) of guarantees for company loans and another 17 billion euros of direct aid, while U.K. ministers pledged “wartime”-like spending to help with mortgage payments, and support for airlines, shops and the hospitality industry, with 330 billion pounds ($398 billion) worth of government-backed loans for struggling companies. France will present an emergency budget on Wednesday.

Stock Futures Fall

The U.S. has also been busy on the response front. The White House moved to send checks to Americans in as soon as two weeks, while the Federal Reserve reintroduced additional crisis-era tools to stabilize markets. Even so, the latest rebound in stocks could prove to be brief, with both U.S. and European futures retracing most of Tuesday’s rise. Traders in this region are still digesting an unprecedented agreement by European Union leaders to restrict most travel into the trading bloc, as borders across the world continue to close.

Coming Up…

The Fed’s scheduled interest rate meeting was cancelled following the central bank’s emergency actions, but we are due to get monetary policy updates from Denmark and Brazil. Meanwhile, corporate earnings come from WM Morrison Supermarkets Plc, a potential beneficiary of stockpiling by consumers, as well as Inditex, owner of the Zara fashion retail chain.

What We’ve Been Reading

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

©2020 Bloomberg L.P.