• Sentiment recovered from APAC lulls prior to European open; currently, remain modestly firmer ahead of US data deluge
• President Trump added administration will be announcing new guidelines on reopening the economy on Thursday
• ECB President Lagarde is fully prepared to increase the size of asset purchase programmes and adjust their composition, by as much as necessary and for as long as needed
• DXY is firmer once again, but yet to breach the 100.00 mark to the upside with major peers subdued as such
• Looking ahead, highlights include US Initial Jobless Claims, Building Permits, Housing Starts, Philadelphia Fed Business Index, OPEC Monthly Oil Report, earnings from L'Oreal & LVMH

CORONAVIRUS UPDATE

US President Trump said our aggressive strategy is working and data suggests the nation has passed the peak on new coronavirus cases. Furthermore, President Trump added administration will be announcing new guidelines on reopening the economy on Thursday and urged the Senate to confirm his nominees to vacancies across the administration or formally adjourn and threatened to use executive powers to try and force both chambers of Congress to adjourn, while Senate Majority Leader McConnell later spoke with President Trump and pledged to find ways to confirm Trump nominees critical to fighting coronavirus although noted it will require consent from Democratic leader. (Newswires)

New Chinese export restrictions has left US Co's PPE due to be dent to the US stranded, according to diplomatic US memos cited by WSJ; with large quantities of PPE and medical goods sitting in Chinese warehouses across China. (WSJ)

UK Health Minister Hancock says it is too early to make a change to lockdown measures, virus would resurface if we ease measures right now, it does appear we are approaching a peak. Note, the UK is expected to announce an extension to its current lockdown period today until May 7th. Separately, under plans being considered by UK government advisers, the nation could be “segmented” into different risks groups which would allow young and healthy adults to return to work, with more vulnerable people set to remain shielded from the virus. (Times) UK Epidemiologist Ferguson states that significant social distancing will have to be maintained possibly until we have a vaccine for the virus. (Twitter)

Milan, Italy is reportedly asking the government to restart activities on May 4th. (Newswires)

German coronavirus cases rise to 130,450 (+2,866) deaths stand at 3,569 (+315), according to the Robert Koch Institute. (Newswires)

Japan's PM Abe is to declare a nationwide state of emergency, potentially through to May 6th, according to Yomiuri. Tokyo has around 149 new cases (prev. over 125) of COVID-19, according to NHK. Japan is reportedly to scrap plans of JPY 300k handouts to households, according to Kyodo.

ASIA

Asian equity markets remained subdued amid the headwinds from Wall St where risk sentiment was dampened by the ongoing oil market rout, weak earnings from the large banks and poor data releases, with comments from President Trump not helping to brighten the mood as he threatened to adjourn Congress if administration nominations are not confirmed. ASX 200 (-0.9%) was dragged by broad weakness across its sectors aside from some resilient patches among defensives and with corporate updates also providing a catalyst for individual stock moves, while Nikkei 225 (-1.3%) was dampened as coronavirus-related disruptions and shutdown extensions hampered Tokyo blue-chip manufacturers. Hang Seng (-0.6%) and Shanghai Comp. (+0.3%) traded subdued as sentiment in Hong Kong was dampened amid the weakening economic climate with Hong Kong Financial Secretary Chan suggesting the government will likely downgrade its outlook, although losses in the mainland were limited as markets await tomorrow’s slew of tier 1 Chinese data including Q1 GDP which People’s Daily noted will remain positive despite the current expectations for a contraction of 6.5% Y/Y. Finally, 10yr JGBs were higher amid the weakness seen across stocks and with prices underpinned following firmer demand at the enhanced liquidity auction in the long to super-long end.

PBoC skipped open market operations and were net neutral on the day. (Newswires) PBoC set USD/CNY mid-point at 7.0714 vs. Exp. 7.0596 (Prev. 7.0402)

PBoC says that it will maintain the normalisation of monetary policy for as long as possible and will keep room for monetary policy adjustments. The Bank will also continue to guide credit funds to support smaller firms through RRR targeted cuts, re-lending and other measures. (Newswires)

Chinese House Prices (Mar) Y/Y 5.3% (Prev. 5.8%). (Newswires)

Philippine Central Bank cut rates by 50bps to 2.75% in out of cycle move. (Newswires)

US

NY Federal Reserve will begin a regular publication of its Weekly Economic Index (WEI) from today to provide timely information on the state of the economy amid the coronavirus pandemic. (Newswires)

US Small Business Administration urged Congress to appropriate additional funds for paycheck protection program, while it added it will not legally be able to issue new loan approvals once there is a lapse in appropriations for programs. (Newswires)

UK/EU

UK BRC Retail Sales (Mar) Y/Y -3.5% (Prev. -0.4%). (Newswires)

Barclaycard said UK consumer spending fell 6% Y/Y in March which was the largest decline since the survey began in 2015, while it added that consumer confidence was also at the lowest on record for the survey. (Newswires)

ONS says 25% of companies surveyed reported they had temporarily ceased trading for the period of Mar 23-Apr 5; out of the businesses still trading, 21% of workforce has been furloughed. (ONS)

ECB President Lagarde says is fully prepared to increase the size of its asset purchase programmes and adjust their composition, by as much as necessary and for as long as needed. It will explore all options and all contingencies to support the economy. Assessing further requests for Euro swap lines. (Newswires)

ECB's Schnabel says that a rate cut would not have helped at a time (March 12th) when profits at banks were already under pressure. (Newswires)

GEOPOLITICS

11 Iranian Revolutionary Guard boats made dangerous and harassing actions against 6 US naval ships in international waters in the North Arabian Gulf, while US crews took action deemed appropriate to avoid a collision. (Newswires)

Chinese Foreign Ministry says that the US' false accusations regarding nuclear testing are not worth refuting. (Newswires)

EQUITIES

European equities hold onto most of their gains (Euro Stoxx 50 +1.0%) as prices were lifted around the entrance of European players following a less optimistic, more-so mixed, APAC lead. News-flow has been light thus far, although the price action seems to be more consolidation from yesterday’s moves. Late yesterday, France, Spain, Austria, Belgium, and Greece extended their short-selling ban on stocks to May 18th (originally set to expire in the coming days), albeit the respective bouses do not see significantly disproportionate price action vs. the region. Sectors are mostly in the green (ex-energy) but do not reflect a clear risk-tone. The IT sector outperforms as chip names see tailwinds from strong TSMC earnings, after the world’s largest contract chipmaker’s Q1 profit almost doubled on chip demand; albeit, H2 revenue is seen “flattish or may decline slightly”, the group also maintained its Capex guidance. Thus, the likes of STMicroelectronics (+3.0%), Infineon (+2.7%) and Dialog Semiconductor (+4.1%) remain underpinned. The sector breakdown sees Travel & Leisure towards the top of the pack amid tailwinds from easyJet’s (+3.0%) trading update in which it announced further steps to strengthen liquidity, which will be sufficient for a lengthy period of fleet grounding. Other individual movers include EDF (-5.9%) as shares feel the brunt of demand potentially falling to 20% of normal levels amid the virus outbreak.

BlackRock Inc (BLK) Q1 20 (USD): EPS USD 6.60 (exp. 6.16/6.20), Revenue 3.71 (exp. 3.6bln); AUM 6.47trln (exp. 6.59trln)

Bank of New York Mellon Corp (BK) Q1 20 (USD): EPS 1.05 (exp. 0.90), Revenue 4.11bln (exp. 3.85bln); 169mln credit provisions; AUM -2% at 1.8trln

TSCM (2330 TT) reported Q1 net income TWD 116.99bln vs. Exp. TWD 109.73bln, Operating profit TWD 128.5bn vs. Prev. TWD 64.3bln YY. Revenue TWD 310.6bln vs. Prev. TWD 218.7bln YY. Gross margin 51.8% vs. Exp. 45.3%.

Huawei is reportedly gradually shifting production of in-house designed chips away from TSMC to a Mainland-China supplier, in readiness for additional US restrictions, according to sources. (Newswires)

Apple (AAPL) - Co. is said to plan a boost to its wearables business with the launch of over-ear headphones. (Newswires)

FX

NZD/AUD - The Antipodean Dollars have both extended losses vs their US rival in wake of comments from RBNZ Governor Orr overnight reiterating that negative interest rates remain an option along with direct financing in response to the coronavirus, while a considerably better than expected Australian employment report was swiftly dismissed due to the early data reference period that preceded the closure of non-essential businesses due to COVID-19. The Kiwi is trying to hold above 0.5945 lows and Aussie reclaim 0.6300 vs 0.6266 or so at one stage as Aud/Nzd straddles 1.0550 ahead of key Chinese releases early on Friday, headlined by Q1 GDP, but also including March ip and retail sales.

JPY/EUR/GBP/CHF - All weaker against the Greenback as the DXY remains elevated within a 99.615-100.000 range, but with the Yen off worst levels and perhaps cushioned by decent option expiry interest at the 108.00 strike (1.8 bn) even though Japan is reportedly on the brink of extending its partial state of emergency from 7 prefectures to the whole country through to May 6. Similarly, the Euro could derive traction from multi-billion expiries under 1.0900 (1.0840-50 in 1.5bn, 1.0875 in 1.5bn, 1.0880-85 in 1.1bn) having derived very little if any support from not quite as bad as forecast Eurozone ip or ECB’s Schnabel ramming home the message that more conventional easing is counterproductive. However, the single currency did get some transitory momentum from Eur/Gbp cross flows as the pair bounced towards 0.8730 and Cable tripped some stops at 1.2460 awaiting official confirmation that UK lockdown will be prolonged until May 7 at least. Elsewhere, the Franc is still mixed just above 0.9700, but edging closer to 1.0500 vs the Euro following deeper Swiss producer and import price deflation (in y/y terms).

CAD/NOK/SEK - Relative G10 outperformers as some buoyancy in oil prices underpins the Loonie and Norwegian Crown after the former extended post-BoC losses, while the Swedish Krona has shrugged off softer Prospera money market inflation expectations and Riksbank-Riksdag wrangling over policy mandates amidst a modest upturn in broad risk sentiment.

EM - Although crude markets seem calmer to the benefit of the Rub, no such comfort for the Mxn in wake of Fitch downgrading Mexico to BBB from BBB-, as the Peso languishes under 24.4000 vs the Buck and not far from earlier April lows.

Australian Employment (Mar) 5.9k vs. Exp. -40.0k (Prev. 26.7k). Australian Unemployment Rate (Mar) 5.2% vs. Exp. 5.5% (Prev. 5.1%) Australian Full Time Employment (Mar) -0.4k (Prev. 6.7k)

RBNZ Governor Orr said have not ruled out negative interest rates, while he added that they are at the end of the beginning regarding monetary stimulus and suggested negative rates remain on the table as well as direct financing. (Newswires)

Fitch downgraded Mexico from BBB to BBB-; Outlook Stable and stated the economic shock from coronavirus will result to a severe recession in Mexico. (Newswires)

FIXED

Given the rebound in EU equities, Eurozone periphery paper adding to recovery gains and stability in oil, Bunds, Gilts and US Treasuries are all displaying degrees of resilience pending the return of NA participants and the next weekly instalment of initial claims that will likely grab the bulk of attention and headline space amidst a raft of releases all at 13.30BST. The respective 10 year bonds are at 172.40 vs 172.04 at worst, 136.82 from 136.69 at the opening low and 139-04+ within 139-07+ to 138.30+ overnight session parameters. For the record, more solid demand for DMO issuance and strong French auctions vs more mixed, incomplete Spanish results, but UK debt and STIRs may glean some independent impetus from a speech on point by BoE’s Tenreyro at 14.30BST as she orates on policy during pandemics.

COMMODITIES

Choppy trade in the complex as WTI and Brent front-month futures nursed earlier losses and extend on gains throughout the European session thus far, with the former initially faring slightly better than the latter heading into the OPEC+ monthly oil market report, albeit this has now reversed and the difference between the contracts widens. WTI potentially saw some support from reports that the US will be paying drillers to leave the oil in the ground amid the supply glut. Traders will now be eyeing the report for the group’s 2020 outlook, especially after producers hammered out a deal over the weekend. For reference, IEA predicts 2020 global oil demand to slump 9.3mln BPD whilst EIA downgraded its forecast by 5.6mln BPD. IEA report also stated that no feasible agreement could cut supply by enough to offset near-term demand losses, so it will be interesting to see OPEC’s take on the market balance. WTI trades on either side of USD 20/bbl after printing an ~18yr base yesterday at USD 19.20/bbl. Brent prices meanwhile gain ground above 28/bbl with its respective YTD base around USD 21.70/bbl. Elsewhere, spot gold is back on a firmer footing and remains comfortably above USD 1700/oz. Some note that the rally in the yellow metal has been underpinned by significant inflows into ETFs. Spot gold sees its recent high at 1747.75/oz. Copper meanwhile, mirrors the gains in stocks, albeit price action in the red metal remains muted/contained. Finally, aluminium prices continued to rise with desks citing rising expectations of supply cuts driving the market alongside modest improvement in the Chinese markets.

Texas oil regulators are to meet April 21st to further discuss production limits. (Newswires)

Russia's St. Petersburg's oil terminal says the country has almost run out of spare storage space in Western regions. (Newswires)