• Sentiment is bolstered on a slowing of coronavirus cases over the weekend in some areas
• OPEC+ meeting was delayed a few days and will now be conducted on Thursday instead of the initially planned Monday
• Kremlin states this is for technical reasons, are ready to co-operate to ensure market stability
• Japanese PM Abe plans to announce a JPY 108tln stimulus package; wants to declare a state of emergency as soon as tomorrow
• UK PM Johnson was taken to hospital for tests due to the coronavirus which Downing Street stated was a precautionary step
• FX sees the USD softer this morning; but some G10 peers are unable to capitalise namely JPY and EUR
• Looking ahead, highlights include BoC Business Outlook Survey

CORONAVIRUS UPDATE

Italy’s coronavirus death toll rose by 525 to 15,887 which was its smallest daily increase since March 19th and the number of confirmed cases rose by 4316 to 128,948 which was the slowest pace of increase in 5 days. (Newswires)

As of Sunday, UK COVID-19 cases rose to 47,806 (prev. 41,903), death toll rose to 4,932 (prev. 4,313); deaths 14.35% rise vs. prior 19.64% increase. (DHSC)

Germany coronavirus cases rose by 3677 to 95391 and death toll rose by 92 to 1434, according to the RKI Health Institute. (Newswires)

Spanish coronavirus cases 135,032 (Prev. 130,759) and deaths stand at 13,055 (Prev. 12,418). (Newswires)

Tokyo has confirmed around 50 new cases of COVID-19, according to Kyodo. However, later reports in NHK suggested the figure was around 100.

UK PM Johnson was taken to hospital for tests due to the coronavirus which Downing Street stated was a precautionary step as the PM had persistent symptoms 10 days after having tested positive for coronavirus. (Newswires)

UK Ministers have begun talks on how and when lockdown rules can be eased amid concerns in the Treasury over the long-term implications of the measures. One option could involve easing by region, industrial sector or expanding the release of “key workers”. (Times) A separate report notes that whilst the lockdown is in force, it will cost the UK economy GBP 2.4bln per day. (Times) However, over the weekend, Health Secretary Hancock warned that lockdown measures could be tightened if they are required to halt the spread of COVID-19. (Newswires)

US President Trump said there is going to be a lot of deaths in the next 2 weeks but also stated we hope we're seeing a levelling off for coronavirus in the hottest spots and that the drop in number of New York deaths could be a good sign. Trump added the US is very far down the line on developing vaccines for coronavirus and we'll see what happens, while he suggested we're starting to see light at the end of the tunnel and that he likes the concept of sending additional economic relief checks to Americans. (Newswires)

US VP Pence said he spoke to a number of state governors on Sunday and all of those states are seeing a trend of some levelling in coronavirus cases. In related news, US CDC was advising wearing face coverings on a voluntary basis and the White House confirmed US President Trump signed a DPA order aimed at preventing hoarding and exports of personal protective equipment. (Newswires)

Austrian Finance Minister says ESM credit lines could open the door for ECB's OMT scheme, joint debt issuance is hypothetical. (Newswires)

ASIA

Asian equity markets traded mostly positive and US equity futures also began the week on the front-foot as participants saw a glimmer of hope from a slowdown in the pace of coronavirus deaths for several hotspots including New York, Spain and Italy in which the latter had its lowest daily death toll since March 19th. ASX 200 (+4.3%) was underpinned amid broad gains across its sectors and with notable outperformance in healthcare following reports that Australian scientists found that Ivermectin which is produced by Merck for treatment of parasites and head lice was successful in killing coronavirus within 48 hours and that the next phase will be for human trials. Nikkei 225 (+4.2%) coat tailed on the favourable currency moves and ahead of this week’s expected roll out of the stimulus package which is said to include increased subsidies, tax deferrals and cash payments to households. Hang Seng (+2.2%) was also positive following the recent monetary policy efforts in the region including the PBoC’s 100bps RRR cut announcement and with the HKMA halving the amount of reserves banks are required to set aside against bad loans, although gains were somewhat limited amid a lack of mainland participants due to the Ching Ming holiday in China. Finally, 10yr JGBs were lower with prices pressured amid gains in stocks and anticipation for increased supply with the Japanese government set to announce a stimulus package and state of emergency declaration which could occur as early as tomorrow.    

Japanese PM Abe plans to announce a JPY 108tln stimulus package, will spend in excess of JPY 6tln for payouts to household firms, wants to issue a declaration of emergency as early as tomorrow, won't take lockdown measures like overseas cities. (Newswires) PM Abe is to conduct a press conference tomorrow. With regards to the declaration of emergency, reports in NHK noted that Japanese PM Abe is to designate, Tokyo and six other prefectures for a state of emergency declaration lasting around one month (earlier reports had suggested around six months).

Singapore is to reportedly spend SGD 5.1bln in its third stimulus package to impact the effects of COVID-19, sources state, the country is seeking to draw SGD 4bln from past reserves for the new package. (Newswires)

US

Senate Minority Leader has reportedly spoken to WH Chief of Staff Meadows to have the US President entirely invoke the Defense Production Act, according to Politico; Schumer has spoken to Trump, Pence and Meadows previously; but this is the first time he has provided the White House Chief of Staff with the list of names. (Politico)

EQUITIES

European equities remain firm (Eurostoxx 50 +3.8%) following a similarly positive APAC session, in which sentiment was bolstered amid positive COVID signals in key hotspots across Europe. In terms of regional performance, UK’s FTSE 100 (+2.0%) lags its peers across the channel as exporters in the index are weighed on by a firmer Sterling, whilst heavyweight energy names (Shell -0.5%, BP -2.5%) also pressure the index amid price action in the complex, with the latter also reducing production at three US refineries by ~15%. European sectors are mostly in the green (ex-energy) with cyclicals outpacing the defensives – reflecting risk appetite. Looking at the sector breakdown, Travel & Leisure leads the gains following multiple consecutive sessions of underperformance, while oil and gas reside at the bottom. Despite the energy sector overall on the backfoot, Tullow Oil (+47%) and Subsea 7 (+8%) see themselves at the top of the Stoxx 600, having seen detrimental losses from the oil market crash. Looking at other individual movers, Rolls-Royce (+14.8%) shares soared higher after announcing the securing of an additional GBP 1.5bln (vs. Exp. above GBP 1bln) revolving credit facility, thus increasing overall liquidity to GBP 6.7bln. Co. also announced that around GBP 300mln of headwinds are seen from COVID-19, whilst cost-cutting measures include a minimum 10% reductions in salaries across the global workforce this year. Rolls-Royce also confirmed it is withdrawing its FY20 guidance. GVC Holdings (+6.4%) sees strength on the back of an undrawn credit facility worth GBP 550mln, whilst expecting a virus impact of GBP 50mln per month. Pirelli (+1.9%) trades higher after announcing further cost-cutting measures, albeit the Co. reduced its FY revenue guidance to EUR 4.3-4.4bln from EUR 5.4bln whilst cutting its EBIT margin target to 14-15% from 17%. Elsewhere, NN Group (-9.5%) resides at the foot of the pan-European index after postponing its dividend and suspending its EUR 250mln share buyback scheme. Broker-led price action includes BBVA (+7.8%), ADP (+6.2%), Carrefour (+2.5%), Carlsberg (+1.5%) and Nokian Renkaat (-1.0%). Finally, as US equity futures hover near session highs, it is worth keeping tabs on today’s limit-up levels: E-Mini S&P (M0) 2601.50, E-Mini Nasdaq (M0) 7888.00 and E-Mini Dow (M0) 21972 – levels which have not yet been reached.

FX

EUR/GBP - Somewhat contrasting starts to the new week for the Euro and Pound as the former loses grip of the 1.0800 handle again vs the Dollar, but the latter pares losses close to 1.2200 and briefly trips stops at 1.2300 on the way to a circa 1.2320 recovery high on news that UK PM Johnson may be heading back to 10 Downing Street soon having been hospitalised over the weekend for nCoV related tests. Eur/Usd has been undermined by a sharp deterioration in the Eurozone Sentix Index and Eur/Gbp selling that has cushioned Sterling to an extent from a deeper than anticipated sub-50 collapse in the UK construction PMI.

AUD/NZD/CAD/NOK/SEK - A clear risk on divide across the rest of the G10 currency spectrum, but with the Greenback gleaning more traction to counter post-NFP weakness via gains vs safer havens that have a greater weighting in the DXY basket. Indeed, the index is nudging the upper end of a 100.850-460 range even though the Aussie, Kiwi and Loonie are all benefiting from less angst over COVID-19 following a decline in the number of confirmed cases and fatalities recorded in epicentres outside China including Italy and Spain. Aud/Usd is firmly back up above 0.6000 eyeing Tuesday’s RBA policy meeting when rates are expected to remain unchanged after recent emergency and scheduled easing, although money market pricing is more even between another 25 bp reduction and no further move. Nzd/Usd has reclaimed 0.5900+ status ahead of NZIER Q1 confidence, while Usd/Cad is hovering around 1.4100 vs 1.4260 at one stage as oil prices recover from another sharp retreat on a degree of OPEC+ disappointment given a delay to the emergency meeting from today until Thursday, at least. Relative calm in crude is also underpinning the Norwegian Krona along with reports that the Government may mull cutting oil output if there is general international consensus, and the Swedish Crown is tagging along.

JPY/CHF - The major laggards amidst renewed risk appetite on the aforementioned seemingly encouraging coronavirus developments, as the Yen falls below 109.00 and Franc meanders between 0.9762-89 in the run up to BoJ and SNB FX reserves data due tomorrow that will be monitored to see how much intervention, if any has been curbing demand for the safe havens. On that note, latest weekly Swiss bank sight deposits already reveal hefty activity as Eur/Chf remains entrenched around 1.0560.

EM - Whippy trade in regional currencies as positive vibes from overall risk sentiment vie with far less upbeat independent factors, like the Rand having to digest another ratings cut following Fitch deciding to downgrade SA deeper into junk territory. However, Usd/Zar has managed to pare back from new 19.3400+ record highs and Eur/Huf is off its all time peak around 368.00 awaiting Hungarian PM Orban’s economic stimulus plan that could equate to 20% of GDP.

FIXED

More volatile trade in bonds as Bunds carved out a new intraday peak just a tick away from parity at 172.05 vs 171.42 at worst in wake of a dire Eurozone Sentix survey and Gilts piggy-backed to 136.68 (-4 ticks vs -1/2 point at one stage) with leverage from a bleak UK construction PMI. However, both EU benchmarks failed to sustain momentum amidst another uptick in stocks due to less severe concern over coronavirus situation. Similarly, US Treasuries have waned and are back near the base of overnight ranges in anticipation of Wall Street emulating the strong performance implied by equity futures.

COMMODITIES

WTI and Brent front-month futures remain subdued, albeit way off the lows posted at the electronic open in which the contracts fell some 10% after OPEC+ postponed its tentative meeting, whilst Saudi and Russia played the blame game over the weekend. In terms of where we stand, the OPEC+ meeting will now be conducted on Thursday instead of the initially planned Monday – with sources noting the delay was to convince other countries to join in on output curtailment plant. Prices were also pressured after Russian President Putin partly blamed Saudi Arabia for the collapse in prices, whilst the Kingdom points the finger at Moscow’s hesitation at the March OPEC meeting – sources also noted that a lack of US commitment is complicating talks. That being said, the CEO of RDIF Dmitriev noted that Moscow and Riyadh are said to be “very, very close” to a deal on oil production cuts. Meanwhile, US President Trump on the weekend said he was considering slapping tariffs on oil imports, or even take other such measures, in order to protect the US energy sector from falling oil prices; Canada is reportedly considering similar measures. Following calls by leading lawmakers in recent weeks for such action. For reference, the US’ imports of petroleum were around 9.1mln BPD in 2019, of which Saudi and Russian imports measured just over 500k each. WTI May futures dipped below its 21 DMA (USD 25.89/bbl) at the open to a low of USD 25.28/bbl before recouping losses amid the overall risk appetite and the prospect of US intervention in the oil markets. Similarly, Brent June printed a low of USD 30.00/bbl, ahead of its respective 21 DMA at USD 29.26/bbl, with prices eyeing USD 34/bbl at the time of writing. The spread between the contracts has also widened to ~USD 6/bbl from Friday’s almost USD 4/bbl. Elsewhere, spot gold gains ground above USD 1600/oz as the USD retreats, and from a technical standpoint, the yellow metal could see mild resistance at USD 1637.50/oz (30 Mar high) before some psychological play at USD 1640/oz. In terms of news-flow for gold, gold refiners PAMP, Valcambi and Argor-Heraeus have been given approval to restart operations at 50% max capacity, having been asked to shut operations in late March. Copper meanwhile remains contained within the tight USD 2.15-2.25/lb range seen over the past 4 sessions, with the red metal again mimicking price action in global stocks.

OPEC+ meeting was delayed a few days and will now be conducted on Thursday instead of the initially planned Monday. Subsequently, Russia's Kremlin says talks between OPEC+ are postponed until Thursday, due to technical reasons, with the talks being prepared; are ready to co-operate with other oil exporting countries to stabilise markets. (Newswires)

US President Trump said that he couldn’t care less about OPEC and they are destroying themselves, while separately stated he would have to do substantial tariffs if oil prices stay the way they are but doesn't think it will be needed. (Newswires)

Russia and Saudi Arabia are reportedly 'very, very close' to a deal on oil production cuts, according to Dmitriev the CEO of RDIF. (CNBC)

UAE's Adnoc is to delay May Official Selling Prices (OSPs) until after the OPEC+ meeting. (Newswires)

There has been reports of 4-5 rockets hitting the Zubeir Oil Field (195k BPD) in Basrah, Iraq where Haliburton (HAL) operates, according to Auora Intel; suggests there are no casualties. (Newswires)