German DAX surges by 5.6%
the major European indices have gotten a big boost to the upside with help late in the day by the German Franco proposed reconstruction plan.
The numbers are showing:
- German DAX, +5.67%
- France’s CAC, +5.25%
- UK’s FTSE, +4.3%
- Spain’s Ibex, +4.5%
- Italy’s FTSE MIB +3.32%
- Portugal’s PSI 20+4.4%
All indices are closing near highs for the day.
In the European debt market, yields were mixed as investors shun the safer countries i.e. Germany, France, UK, and poured money into the riskier (risk on) countries led by Italy with a -19 basis point decline.
In other markets as London/European traders look to exit:
- spot gold has reversed sharply lower and currently trades down $9.10 or -0.52% at $1734.50
- WTI crude oil futures are rising sharply with the July contract up $3 or 10.09 percent at $32.44
In the forex, the US dollar has moved sharply lower in the New York morning session. The JPY remains the weakest of the majors as JPY pairs soar on risk on sentiment. The NZD and the AUD continues their run to the upside, and are the strongest of the majors. The NZDJPY is up near 2% on the day and is the biggest mover the day.
Just about everyone is making vaccine progress these days
It is tough to try and make sense of the developments of a coronavirus vaccine when we are trading on whatever the companies are telling us, rather than the science of it. But hey, that’s what happens when you don’t have that medical/biotech background.
In a statement today, Moderna is saying that it has had ‘positive data’ from its early-stage human trial for a coronavirus vaccine. Shares are jumping by more than 10% in pre-market as the company reports on their progress and this is also lifting general sentiment.
According to reports, the vaccine helped to produce coronavirus antibodies in all 45 participants of the trial. From a report by CNBC:
Comments via Chinese state media, Xinhua
- China will increase two-way fluctuations of the yuan
- China is to improve market-based currency formation mechanism
- China will deepen market-based interest rate reform
- China to allow foreign controlled companies in more sectors
- China to ease market access in the services sector
- China will minimise direct interference from government on micro-economic activities
Some interesting remarks being communicated at an interesting time. If anything, I would argue that this repeated pledge to further open up its economy and financial markets is to reassure investors that the overall landscape has not changed.
In the big picture though, you have to wonder how the amount of nationalism and xenophobia brought about by the coronavirus crisis is going to translate into business/investment decisions of many companies from all countries across the world.
Bloomberg reports on the matter
The report says that Chinese oil demand is all but back to levels last seen before nationwide lockdown measures were imposed to curb the spread of the coronavirus outbreak, according to people with inside knowledge of the country’s energy industry.
Adding that consumption of gasoline and diesel has fully recovered as factories reopen and commuters drive rather than use public transport.
The exact level of oil demand in real time – according to executives and traders who monitor the country’s consumption – is said to be about 13 million bpd, which is just shy of the 13.4 million bpd seen around May 2019 and the 13.7 million bpd seen in December 2019.
For some context, the apparent drop in Chinese oil demand was seen at around 20%:
However true the figures are from this report, it is certainly giving hope to oil bulls that the market can recover from the severe imbalance – and perhaps more quickly than thought – that we are seeing currently. WTI crude is now up by over 8% on the day to $31.85.
Comments by the German central bank in its monthly report
- Sees momentum picking up later in Q2 as lockdown is lifted
- Construction sector to be more robust than the rest of the economy
- Fiscal support plan should be targeted, temporary
- Some 6 million workers in state wage support during the month of April
A couple of token remarks from the Bundesbank with the headline pretty much reaffirming what we all already know about the German – and Eurozone for that matter – economy.
Later this week we will be getting the May preliminary PMI reports from the euro area and they should reflect a decent improvement relative to the historically low figures from April.
But even then, just take note that the bounce in PMI will not reflect the true loss of economic activity since PMI survey sentiment is largely based off one question i.e. how are business conditions compared to last month?
In that sense, the economic situation in May is certainly better than in April as lockdown measures are slowly being eased but it is definitely still way off pre-virus levels.
Austria, Belgium, France, Greece, Italy and Spain decide to scrap bans on short-selling stocks that began back in March
Besides Italy, the other five EU states will see the bans expire at 2159 GMT today and they have decided against renewing it. For some context, the bans were introduced back in March due to “excessive market volatility” and were extended back in April here.
As the other market watchdogs choose not to extend the bans, Italy is following to cut short their short-selling ban – supposed to be until 18 June – to align itself with the others.
Comments by Huawei rotating CEO, Guo Ping
- Still working out a response to US chip restrictions
- Business will be significantly affected by the curbs
- But confident of finding solutions soon
In case you missed it, the Huawei issue from last Friday dragged the market lower initially before equities staged yet another late comeback towards the end of the week.
This is going to be a long and drawn out saga between the two countries, so expect more measures and countermeasures to be enacted in the coming weeks/months in response.