The Market Today
All 50 States Under Emergency Declarations as Corporate Earnings Season Kicks Off
by Craig Dismuke, Dudley Carter
Coronavirus Chartbook (Click Here) – Updated by 9:30 a.m. CT
There continues to be evidence of success in containment efforts as the daily growth in confirmed cases has plateaued and is slowing in many countries. On a week-over-week basis, the number of cases has increased over 570k to 1.86 million as of this morning. The fatality rate of confirmed cases is now up to 6.2% and continues climbing. On a week-over-week basis, cases in the U.S. increased 65% versus a 139% increase in the previous week. The same trend of slower growth last week held true for Italy, Spain, Germany, France, and the U.K. However, there has not yet been a sharp fall-off in growth which appears to be a prerequisite for Americans regaining some mobility.
Over the weekend, the State of Wyoming declared a state of emergency marking the first time in history that all 50 states have simultaneously operated under emergency declarations.
There are no economic reports on the calendar today.
Oil Prices Give Up Gains After Historic Production Cut: Global participation in Monday’s trading session has been sporadic so far as a couple of major markets in Asia and all of Europe are closed in celebration of the Easter Monday holiday. The equity markets that were open in Asia, however, pulled back, U.S. futures dropped, and Treasury yields were subdued. The lack of excitement left investors eyeing the response in oil markets to an agreement announced Sunday afternoon for OPEC+ to significantly cut production. Along with the virus updates over the weekend, the agreement to cut daily oil production by a record 9.7 million barrels brought to a pause a saga that has cut the cost of U.S. WTI crude by 45% since a price war between Saudi Arabia and Russia erupted in early March. The possibility for an agreement was first hinted at by President Trump on April 2, but negotiations were riddled with delays and uncertainty. U.S. WTI initially jumped more than 8% on Monday, but has since erased that gain and was unchanged at 7:15 a.m. CT. The commodity is up 13.2% from its March 30 low, the cheapest oil since 2002, but remains down 62.7% in 2020.
Equity Futures and Yields Remain Subdued as Investors Brace for First Wave of Corporate Earnings: In other markets, Asia-Pacific stocks edged lower by 0.6% on average and U.S. futures had declined by similar amounts. Despite the lift from oil, investors remain wary as they face the first real wave of corporate earnings results from the first quarter. Many companies have already suspended forward guidance amid the pandemic and there is obvious anxiety and uncertainty around how much damage the virus has already caused to corporate bottom lines. Companies such as Johnson & Johnson, many of the biggest U.S. banks such as JPMorgan Chase and Bank of America, UnitedHealth Group, and United Airlines are among those scheduled to announce financial results this week. Treasury yields were little changed for most of the overnight session but began to inch higher as U.S. trading approached. As equity futures trimmed their declines, the 2-year yield rose to up 0.6 bps on the day at 0.23% while the 10-year yield added 2.7 bps to 0.75%.
ICYMI – April 10, 2020 Weekly Market Recap: Despite more evidence the coronavirus has significantly damaged economies across the globe, stocks rose and the yield curve steepened as longer yields pushed higher in a week shortened by the Good Friday holiday. Measures of consumer confidence in Japan, the U.K., the Eurozone, and U.S. all plunged in the most recent updates for April. Drawing the greatest focus among the economic data released, another 6.6 million Americans filed for unemployment insurance during the week ended April 4, taking the total number of workers who have been furloughed or laid off as a result of the pandemic to more than 16.8 million. Nonetheless, the S&P 500 surged 12.1%, its best week since 1974, and the 10-year Treasury yield added 12.4 bps. The risk-on shift started immediately last week after developments over the weekend offered investors a glimpse of optimism that the virus spread could be slowing down in some of the world’s most heavily devastated hot spots. A turn lower in key virus curves could be a first step to the gradual opening up of major world economies that have been shuttered for weeks now. As economies have come to a halt, policymakers have stepped in with unprecedented levels of support as they attempt to mitigate the depth of the imminent recession. The Fed last week upped the ante with a funding facility to aid small business lending under the Paycheck Protection Program; expanded the previously announced PMCCF, SMCCF, and TALF facilities; established the Main Street Lending Program to aid mid-sized companies; and established the Municipal Lending Facility to support state and local governments. Click here to view the full recap.