• Sentiment remains bolstered from the APAC lead, as US equity futures extend on gains
• Delegate reports intimate that Saudi and Russia are coming closer to an output deal; however, Russian press reports have subsequently pushed back on this
• Japanese PM Abe declares a State of Emergency in 7 prefectures as expected; Gov’t has approved JPY 108.2trl in stimulus
• RBA kept rates on hold at 0.25% as expected and the board reaffirmed the 3yr yield target at 0.25%
• FX sees the DXY softer, to the benefit of all major counterparts – particularly antipodeans
• Looking ahead, highlights include US JOLTS, EIA STEO, APIs, Eurogroup Meeting, supply from the US

CORONAVIRUS UPDATE

US President Trump said we have made tremendous progress on therapeutics and have contacted UK PM Johnson's doctors, while he added that the administration wants to try to be able to lift restrictions on April 30th. President Trump said businesses applied for more than USD 40bln in relief loans, that USD 30bln in hospital aid is going out this week and that they could very well do a 2nd round of direct payments to Americans. (Newswires)

US House Speaker Pelosi told Democrats she wants the next virus bill to be at least USD 1tln, while she is said to be seeking more directs payments and small business loans in the next bill. (Newswires)

AFP tweeted that the US record 1150 coronavirus deaths citing the Johns Hopkins tracker. (AFP)

Mainland China reported 32 additional coronavirus cases and 0 new deaths on April 6th vs. 39 new cases and 1 death on April 5th, to bring the total number of cases in the mainland to 81470 and death toll remained at 3331. (Newswires)

Italy could reportedly begin the gradual end of the lockdown period by May 4th, according to Corriere. (Corriere Della Sera)

German Economy Minster Altmaier says there is not enough data to support the loosening of restrictions, and companies must very soon be able to recommence output. (Newswires) Germany's Robert Koch Institute says we are not at the stage yet we can talk about an easing of cases yet and we need to wait and see what happens in the coming days. (Newswires)

Japanese PM Abe declares a State of Emergency in Tokyo, Osaka, alongside five other prefectures for one month amid coronavirus; additionally, Japanese government has approved the JPY 108.2trl emergency economic stimulus package with JPY 39.5trl spending; as expected. Separately, Tokyo has over 80 new cases of COVID-19, according to NHK. (Newswires/NHK)

Spanish coronavirus cases 140,510 (Prev. 135,032) and deaths stand at 13,798 ( +743; Prev. 13,055). (Newswires)

ASIA

Asian equity markets traded mostly higher as the region took impetus from the considerable pick up on Wall St where all major indices finished higher by at least 7.0% and the DJIA notched a more than 1600-point gain amid hopes of a slowdown in the coronavirus outbreak after encouraging numbers from various hot spots, although some economists warned caution given that the economy was far from out of the woods and the latest reports suggested the daily death toll in the US remained at an alarming level of 1150 according to the Johns Hopkins tracker. ASX 200 (-0.7%) and Nikkei 225 (+2.0%) were both boosted and surged over 2% shortly after the open although gains in Australia then waned amid losses in the healthcare sector and cautiousness heading into the RBA decision, while the Japanese benchmark briefly broke above the 19000 level supported by better than expected Housing Spending data and plans for a JPY 108tln package but later gave back a majority of gains heading into the state of emergency declaration. Hang Seng (+2.1%) and Shanghai Comp. (+2.1%) were also positive with outperformance seen in the mainland as it plays catch up on return from the extended weekend and took its first opportunity to react to the PBoC’s 100bps targeted RRR cut announcement. Finally, 10yr JGBs were higher as prices bounced back from support around the 152.00 level and with the BoJ offering to buy JPY 150bln of corporate bonds, although upside was also capped due to the mostly upbeat risk tone and following weaker results at the 30yr JGB auction.

PBoC skipped open market operations for a net daily drain of CNY 70bln. (Newswires) PBoC set USD/CNY mid-point at 7.0939 vs. Exp. 7.0915 (Prev. 7.1104)

Japanese All Household Spending (Feb) M/M 0.8% vs. Exp. -0.2% (Prev. -1.6%). (Newswires) Japanese All Household Spending (Feb) Y/Y -0.3% vs. Exp. -3.9% (Prev. -3.9%)

UK/EU

German Ifo Institute: states that industrial production in Germany is set to plummet - Ifo index for production expectations dropped in March from +2.0 to -20.8, on this they assume the development is underestimated given the survey period; the most drastic slump since the survey began. (Newswires)

US

EQUITIES

European stocks post another straight session of gains in early trade [Euro Stoxx 50 +3.5%], following a mostly positive APAC handover, as participants see optimism on the COVID-19 containments front and heading into the Eurogroup meeting on Finance Ministers, in which three stimulus measures are expected to be discussed (Primer available here). Broad-based gains are seen across the major European bourses, whilst Italy’s FTSE MIB (+5.2%) outperforms in the periphery, with the index’s large financial sector benefitting from price action in the fixed income complex – and as the region feels tailwinds from the ECB allocating a lion’s share of its bond-buying (35%) to Italian debt in March. Sectors are all in positive territory and reflect a “risk-on” mood, with cyclicals outpacing defensives, Financials benefit from the high-yield environment. The theme of today is a sharp rebound across stocks and sectors that have been decimated on the COVID-19 outbreak. The sector breakdown sees Travel & Leisure notably outperforming, whilst Auto names follow a close second. Thus, easyJet (+18.9%), Carnival (+18.8%) among the top gainers in the region, whilst aircraft engine makers Rolls Royce (+14.0%) and Safran (+9.0%) also see gains in excess of 10%, having recently been hit on the prospects of declining aircraft productions on lower demand. On the flip side, Healthcare names are softer given the sector’s relative buoyancy during the demise of riskier stocks – AstraZeneca (-1.8%), Novo Nordisk (-1.5%).

FX

DXY - The Dollar is softer across the board amidst another upturn in sentiment on the hope that tentative signs of COVID-19 curve flattening do not prove short-lived and completely dashed by Tuesday’s global updates on the state of the virus. The DXY has retreated a bit further from recent recovery highs just shy of 101.000 as a result and is now hovering a fraction above 100.000 with little in the way of technical support before March 31’s high (99.948) to supplement the obvious psychological props.

AUD/NZD - The Aussie is outperforming after the RBA maintained rates overnight and offered some exit policy guidance, albeit somewhat premature at this still very formative stage. However, bolstered by the aforementioned less downbeat risk tone Aud/Usd has built on advances through 0.6150 and got to within a whisker of 0.6200 before running out of momentum, while Aud/Nzd has crossed 1.0300 as the Kiwi failed to sustain 0.6000+ status in wake of NZIER sentiment sinking in Q1 and ahead of latest bi-weekly GDT auction results.

NOK/GBP/EUR - The Norwegian Crown looks all set to extend its bull run against the backdrop of firm oil prices in the run up to Thursday’s OPEC+ meeting that Russia will attend and is reportedly nearing an agreement with Saudi Arabia about how many bpd to cut in order to stabilise the cost of crude. Eur/Nok has been down to circa 11.1060 even though the single currency has unwound declines vs the Buck at 1.0880 from sub-1.0800. Elsewhere, the Pound has also regrouped after depreciation on news of UK PM Johnson’s transfer to intensive care pushed Cable down to around 1.2165, but hit resistance into 1.2350 and is still below 0.8800 in Euro cross terms.

CHF/CAD/JPY - The Franc is back near up the top of a 0.9725-95 or so range after SNB reserves data showing a fall in stark contrast to weekly Swiss sight deposits supporting the notion that intervention has picked up markedly of late, with little reaction to rises in jobless rates that are likely to pale in comparison to increases in unemployment to come. Similarly, the Loonie has pared post-BoC business outlook survey losses with the aid of buoyancy in oil to retest 1.4000 ahead of Canada’s Ivey PMI and awaiting the nation’s contribution to the joint crude output cut, assuming there is consensus. Meanwhile, the Yen has also profited at the Greenback’s expense, though to a lesser extent as a renowned safe-haven and with Japan confirming 7 prefectures in an official state of emergency, including Tokyo. Usd/Jpy is currently pivoting 109.00, but from a chart perspective still on an upward trajectory while above the 200 DMA (108.34) and not likely to stir hefty option expiry interest from 108.00 to 108.50 rolling off on Wednesday unless things change quite dramatically in the next 24 hours of course.

EM - Widespread rebounds vs the Dollar, and with the Rand unwinding more of its significant underperformance through 18.3000 vs 19.3500 at the other extreme due to consolidation and short covering more than anything fundamental, aside from the broad improvement in risk sentiment.

RBA kept rates on hold at 0.25% as expected and the board reaffirmed the 3yr yield target at 0.25% which is expected to remain in place until progress is being made towards goals of full employment and inflation. RBA added the board is committed to doing what it can to support jobs, incomes and businesses as Australia deals with the coronavirus but noted that once the virus is contained, a recovery in the global economy is expected. Furthermore, it stated that if conditions continue to improve, it is likely that smaller less frequent purchases of government bonds will be needed. (Newswires)

Australian Trade Balance (AUD)(Feb) 4361mln vs. Exp. 3650mln (Prev. 5210mln). (Newswires) Australian Exports (Feb) M/M -5% (Prev. -3.0%) Australian Imports (Feb) M/M -4% (Prev. -3.0%)

FIXED

It seems that bearish momentum rather than anything new or more negative has prompted the latest downturn in 10 year German debt as another notable chart support in the guise of the 100 DMA (171.05) has been breached on the way down to a fresh 170.91 intraday Eurex low. Indeed, linker supply was absorbed well enough, albeit demand mixed vs previous sales and average yields less negative, while the charge in EU stocks has abated somewhat. Moreover, Gilts are still holding above 136.00 after a marginally closer look, at 136.03 before an even bigger bounce to 136.30 and 10 year T-notes are a fraction off their overnight session base ahead of JOLTS and Usd25 bn supply in that tenor.

COMMODITIES

WTI and Brent front-month futures have resumed their rise in the run-up to a “make or break” OPEC+ meeting, with members outside the group urged to join in on a potential coordinated move. In terms of where we stand, the OPEC+ meeting is due to take place at on Thursday at 1500BST, with a presser to follow (all times tentative) – OPEC+ press conferences tend to be delayed. Reports also noted that G20 ministers to convene an extraordinary meeting on Friday at 1300BST, to discuss the energy market turmoil, according to reports. Energy Intel notes of a meeting on Friday in which members outside OPEC+ will be asked pledge additional reductions, “over and above 10mln BPD”. OPEC sources stated that OPEC+ group is reportedly likely to agree to oil production cuts on Thursday although it is contingent upon the US joining in with the production cuts, according to three OPEC+ sources. That said, earlier reports intimated OPEC+ still can't reach a preliminary consensus on individual volumes of oil production cuts, particularly the largest producers, according to three delegations cited by TASS. As a reminder, under one of the touted OPEC+ scenarios: 10mln BPD cuts will include North America; Saudi would cut a minimum of 3mln BPD; Russia 1.5mln BPD; US, Canada, and Brazil almost 2mln BPD (Texas at least 500k BPD) according to sources cited by WSJ’s Summer Said. Furthermore, today will see the release of the first monthly oil report, the EIA STEO, which will depict a clear impact of the coronavirus outbreak – thus eyes will be on the magnitude of further demand downgrades and revisions lower to US crude output as a function of lower oil prices. That being said, the release may be overshadowed by the tentative OPEC+ congregation later in the week, which will shift the dynamic in the oil market. In terms of data, the weekly API releases at the usual time, with forecasts for a headline build of around 9mln barrels over the last week. WTI May’20 hovers around USD 27/bbl (vs. low of USD 26.29/bbl, and high USD 27.19), whilst its Brent counterpart re-eyes USD 34/bbl to the upside having briefly breached the level during late APAC trade. Elsewhere, spot gold fails to benefit from the weaker Buck, as the rise in equities proves the yellow metal to be less attractive, with prices back below 1650/oz after rising to a whisker away from 1680/oz in the overnight session. Meanwhile, copper prices continue to mimic the rise in stocks, with the red metal piggybacking overall risk appetite and breaking out of its recent range (USD 2-2.25lb), with red metal prices around USD 2.3/lb at the time of writing.

US President Trump commented that nobody has asked him to cut US oil output and that he will decide if OPEC asks US to cut production, while he added US producers have cut automatically as a reaction to the market. (Newswires)

Delegate reports intimate that Saudi and Russia are coming closer to an output deal; however, Russian press reports have subsequently pushed back on this stating all will be decided at Thursday’s meeting. (Newswires)

OPEC+ oil cut volume for Thursday's meeting is dependent on the amount US, Canada, Brazil and others propose to cut, according to OPEC sources; notes, the baseline for oil cuts is yet to be agreed upon. (Newswires)

Russia has reportedly agreed to partake in Friday's G20 call between energy ministers, sources state. (Newswires)

CME raised crude oil NYMEX margins by 5.5% to USD 6700/contract from USD 6350/contract. (Newswires)