• Crude remains under substantial pressure, the scale of which was enough to trigger circuit breakers in the June WTI future at USD 11.79/bbl
• European bourses have extended on opening losses, following the crude complex’s decline; US futures are equally subdued
• EU Commission's Thursday summit will not take a final decision on financing a coronvairus recovery fund, according to Diplomats and Officials
• North Korea leader Kim is said to be in grave danger following surgery; however, this has received pushback from South Korea
• Looking ahead, highlights include Canadian Retail Sales, APIs. Earnings from: Lockheed Martin & Phillip Morris

CORONAVIRUS UPDATE

US President Trump said Americans must continue practising social distancing and that we hope to have an agreement on small business program soon with maybe a vote in the Senate for Tuesday, while he added that discussions on phase 4 stimulus will begin shortly. (Newswires)

US House Speaker Pelosi said negotiators have agreed to terms on the principles for next virus relief package although talks still continue on final language and noted they have about USD 120bln for small businesses in the package. (Newswires) More recently, the Politico Bureau Chief tweeted “No deal yet on latest coronavirus relief package, both sides still going over text. Senate vote still possible tomorrow (maybe), earliest House will vote is now Thursday”.

Georgia will permit some shuttered businesses to reopen this week including salons, gym, bowling alleys and some other indoor facilities, while South Carolina is also to permit several types of stores to reopen. (Newswires)

EU Commission's Thursday summit will not take a final decision on financing a coronvairus recovery fund, according to Diplomats and Officials; several members call for clear expiration date for the COVID-19 recovery fund; Want to finance the recovery fund in 2021-22 via head room in the next joint budget. (Newswires)

ECB's Panetta says the EZ fiscal response to COVID-19 is inadequate thus far, and threatens the single market, according to Politico. (Newswires)

China's Global Times tweeted the China Research team research team released first animal experiment data on a COVID-19 vaccine, which showed the vaccine is effective and safe on rats and non-human primates. (Newswires)

Singapore Health Ministry confirms 1,111 new coronavirus cases (Prev. 1,426) as of Tuesday. (Newswires) Singapore's PM Lee says he will extend the partial lockdown circuit breaker measure until 1st June. (Newswires)

Tokyo has around 120 (Prev. 102) new cases of COVID-19, according to Kyodo.

ASIA

Asian equity markets were negative across the board following the weak handover from Wall St where sentiment was subdued. Oil markets drew a lot of attention after WTI crude futures plunged and the May contract turned negative for the first time in history, briefly resulting to losses of over 300% and lows of around USD -40/bbl. This was due to the ongoing supply glut and filling storage culminating to a lack of buying interest on a contract which is due for settlement today. Note, the more widely-traded June contract remained above USD 20/bbl throughout the chaos and the May contract gradually returned to positive territory. ASX 200 (-2.5%) weakened with focus on corporate updates including mixed quarterly production numbers from BHP which subsequently weighed on the mining giant and with Virgin Australia going into voluntary administration in an effort to recapitalize amid the government’s refusal for a bailout. Nikkei 225 (-2.0%) was pressured by the flows into the currency and the KOSPI (-1.0%) was initially among the worst hit amid uncertainty regarding the geopolitical climate for the Korean peninsula after reports that North Korea leader Kim was in grave danger following cardiovascular surgery which boosted defence stocks, although South Korea have denied the reports of Kim’s condition. Elsewhere, Hang Seng (-2.1%) and Shanghai Comp. (-0.9%) also traded lower with underperformance in Hong Kong after social distancing restrictions were extended for 14 days and after the recent sovereign rating downgrade by Fitch. Finally, 10yr JGBs were choppy with initial gains seen amid the risk averse tone and similar upside in T-notes but with price action only mild as participants also digested mixed results from the 20yr JGB auction which saw a lower b/c and wider tail in price.

PBoC skipped open market operations and were net neutral on the day. (Newswires) PBoC conducted CNY 5bln central bank bill swap operation today. (Newswires) PBoC set USD/CNY mid-point at 7.0752 vs. Exp. 7.0750 (Prev. 7.0657)

Hong Kong Chief Executive Lam said the government extended coronavirus-related restrictions for 14 days. (Newswires) Hong Kong have sold the HKD for the first time in over 4-year, to defend the peg.

US

US President Trump tweeted he will sign an executive order to temporarily suspend immigration into the US citing virus and need to protect jobs of American citizens. (Newswires)

US Senate Democrat Leader Schumer urged the Fed to make lending programs open to non-profits and local governments, during a call with Fed Chair Powell. In other news, New Jersey Governor Murphy wants the option to borrow from the Fed as well as direct Federal cash aid and commented that our revenues have fallen off a cliff. (Newswires)

UK/EU

German Finance Ministry Monthly Report noted Industrial Output will plunge for March and that pandemic is increasing job uncertainty and which is impacting consumers' propensity to buy and income expectations. (Newswires)

UK Claimant Count Unemployment Change (Mar) 12.1k vs. Exp. 172.5k (Prev. 17.3k); ILO Unemployment Rate (Feb) 4.0% vs. Exp. 3.9% (Prev. 3.9%). (Newswires)

German ZEW Current Conditions (Apr) -91.5 vs. Exp. -77.5 (Prev. -43.1)

German ZEW Economic Sentiment (Apr) 28.2 vs. Exp. -42.3 (Prev. -49.5)

ZEW says financial markets are beginning to see a light at the end of the tunnel; results of special COVID-19 questions show experts do not expect to see economic growth until Q3 2020; Economic output not expected to return to pre-crisis levels before 202

GEOPOLITICS

North Korea leader Kim is said to be in grave danger following surgery and an anonymous US official said the US has information on North Korea leader Kim's critical condition and is studying the line of succession. However, the South Korea government said North Korea Leader Kim is not seriously ill and noted there is no unusual movement in North Korea, while China’s Communist Party International Liaison Department said North Korea Leader Kim is thought to not be critically ill. (Newswires/CNN/Yonhap)

EQUITIES

Europe has latched onto the downbeat lead from the Asia-Pac session (Euro Stoxx 50 -2.1%), as oil markets continue to crater whilst stock also weighs the COVID-19 impact on large-cap earnings. US equity futures fare slightly better than its counterparts across the pond – with the prospect of another State-side stimulus package potentially providing some support. Broader sectors are lower across the board and point towards risk aversion. Energy underperforms amid the depressing performance in the crude complex, whilst the breakdown has Oil & Gas as the marked laggard, closely following by Basic Resources and Banks. In terms of individual movers, SAP (-2.3%) fell post earnings after cutting its FY total revenue guidance alongside its FCF guidance, adding to the woes for the IT sector after IBM earnings overnight. The company expects a deterioration in Q2 before gradual improvement in Q3 and Q4. PSA (-0.5%) remains subdued by its respective update in which it sees European car sales -25% and China -10% in FY20. Richemont (-3.0%) and Swatch (-2.9%) bear the brunt of Swiss watch sales slumping over 20% YY.

Coca-Cola Co (KO) Q1 20 (USD): Non-GAAP EPS 0.51 (exp. 0.44), Revenue 8.6bln (exp. 8.29bln). COVID-19 will impact Q2 materially; Co. withdraws its guidance

FX

NZD/AUD/CAD - It remains to be seen whether the Kiwi and Aussie fall prey to the phenomenon of ‘turnaround Tuesday’, but for now the tide has certainly changed markedly as RBNZ Governor Orr reiterated dovish guidance overnight and the option of more stimulus at the May policy meeting, while his RBA counterpart delivered a daunting economic outlook to compound a sharp decline in wages and the stats bureau publishing figures for March 14-April 4 revealing a 6% drop in employment. In response, Nzd/Usd is back below 0.6000 and Aud/Usd is under 0.6300 again, while the Aud/Nzd cross pivots 1.0500. For the record, RBA minutes did not really impact even though scaling back QE was mentioned if conditions improve. Elsewhere, Loonie losses are accumulating almost in lock-step with oil prices, as WTI and Brent lose grip of Usd12 and Usd19/brl handles respectively in the June contracts after Monday’s May capitulation, with Usd/Cad up through 1.4200 and eyeing 1.4250 ahead of Canadian retail sales data.

USD/JPY - The Yen is marginally eclipsing the Dollar as safe-haven currency of choice amidst renewed risk-off positioning and the ongoing rout in crude markets, as Usd/Jpy edges towards 107.00 and the DXY tests resistance above 100.00 around 100.300 again that has been rejected a couple of times in recent sessions.

NOK/GBP/SEK/CHF/EUR - No shock that the Norwegian Krona, Russian Rouble and Mexican Peso are all underperforming alongside oil, but broader risk asset contagion is also weighing heavily on the likes of the Swedish Crown, British Pound and even Swiss Franc. Indeed, better than expected jobs data and a wider trade surplus have been largely ignored, while the Euro has only derived partial encouragement from the latest German ZEW survey showing some signs of improvement in sentiment to counter the steep deterioration in current conditions. Eur/Nok has been up above 11.5900, Usd/Rub as high as 77.2400+, Usd/Mxn over 24.3000, while Eur/Sek straddles 10.9000, Cable gives up another big figure at 1.2400 and breaches the 21 DMA (1.2357), Usd/Chf rebounds from sub-0.9700 to circa 0.9715 and Eur/Usd rotates either side of 1.0850.

EM - Contrasting fortunes for the Zar and Hkd as the Rand weakens on more SA financial strain given a missed loan payment by the Land and Agricultural Development Bank, while the HKMA has sold Hong Dollars to maintain the peg for the first time in over 4 years despite yesterday’s ratings downgrade by Fitch.

RBA Minutes from April 7th meeting stated daily operations are likely to be on smaller scale in near-term and that they will do what is necessary to achieve 3yr yield target, while the board remained committed to supporting jobs, incomes and businesses. RBA added that the Australian financial system has stayed resilient and that GDP could decline significantly in June quarter, as well as remain subdued in September quarter. Furthermore, the minutes suggested it is unlikely that support packages will provide strong boost to spending in near-term due to shutdown and restrictions. (Newswires)

Australia Bureau of Statistics said new data showed jobs declined 6% for March 14th-April 4th. (Newswires)

RBNZ Governor Orr said QE is more effective to deal with sharp virus shock rather than negative rates, but added that negative rates are not ruled out and that they are open minded on direct monetization of New Zealand debt. (Newswires)

RBA Governor Lowe says monetary response is keeping funding costs low, adds will continue to adjust bond and repo operations as needed to support liquidity in the system. Lowe added that the Unemployment rate is likely to be around 10% by June but hopes it might be lower than this if businesses are able to retain their employees on lower hours. Has no objection to the purchase of longer-dated bonds, focus on the short-end for now; does not believe bank dividends need to be banned. (Newswires)

FIXED

It’s been a relatively measured advance to new intraday peaks for Bunds, Gilts and US Treasuries given the persistent weakness in stocks and further capitulation in crude markets where Brent seemed to be feeling the strain early on before June WTI caught up and tumbled over Usd 10/brl from best levels at one stage. However, at 173.08, 137.05 and 139-17+ respectively the respective 10 year benchmarks have crossed bullish technical levels that may embellish their safe-haven allure, while Italian bonds are lagging between 135.61-136.70 parameters vs yesterday’s 136.19 close, albeit on syndication considerations rather than any real or new negative fundamental factors as demand for 5 and 30 year BTPs tops Eur70 bn.

COMMODITIES

WTI and Brent June contracts are posting unprecedented losses. Attention remains on the oil market since yesterday WTI May crude futures plunged to negative territory for the first time in history, briefly resulting to losses of over 300% and lows of around USD -40/bbl. This was sparked by the ongoing supply glut and filling storage culminating to a lack of buying interest on the contract which is due for expiry later today. The volatile price action followed through to today’s trade with WTI June contracts -42% at one point, and Brent down over 25% - with the former dipping below USD 12/bbl, to trigger a 2-minute circuit breaker and the latter residing sub-20/bbl. Russia’s Kremlin emerged amid the volatile action and downplayed the moves in the oil market, stating that its speculation sparked the movements. Kremlin also stated talks between OPEC+ members can be set up if needed; Moscow has all reserves it needs to offset weak oil prices. Meanwhile yesterday, WSJ citing sources noted that Saudi is mulling applying the agreed-upon oil cuts as soon as possible instead of waiting until May 1st. Elsewhere, today will see the second official Texas Railroad Commission (RRC) meeting, where the Texas regulatory agency is expected today to provide more colour on its stance regarding potential oil production curtailment in the state. However, the RRC is reportedly unlikely to vote on a plan to mandate oil production cuts for Texas at the Tuesday meeting, according to Energy Intel citing sources. As a reminder, the meeting last week saw disagreement on whether cuts should be implemented or not, with larger producers mostly arguing for market-driven declines, and smaller players supportive of cuts. Elsewhere, spot gold trades relatively flat and meanders just south of USD 1700/oz. Copper prices meanwhile track sentiment and the downside in stocks, with the red metal now below USD 2.25/lb.

US President Trump said we're looking at putting as much as 75mln bbls into SPR which would top it out and that the oil price drop is short-term in which a lot of people got caught out and was largely a financial squeeze. Furthermore, President Trump suggested oil producers need to do more by the market in terms of output cuts and that the administration will either ask permission from Congress to buy oil or we will store it, while he also responded we will look at it when questioned about stopping shipments of oil from Saudi Arabia. (Newswires)

Texas Railroad Commission (RRC) is reportedly unlikely to vote on a plan to mandate oil production cuts for Texas at the Tuesday meeting, according to Energy Intel citing sources. (Twitter)

Goldman Sachs suggested there could be more chaos for May WTI crude contract and notes oil collapse is due to unprecedented supply glut, while it warned June WTI contract could be pressured next. (Newswires)

Russian Kremlin says it is closely monitoring oil prices and sees nothing apocalyptic in falling oil prices; talks between OPEC+ members can be set up if needed; Moscow has all reserves it needs to offset weak oil prices. (Newswires)