GLOBAL MARKETS-Coronavirus hopes propel stocks, euro higher

* Early signs of virus peaking in Europe, New York

* Broad gains from London to Sydney on stock markets

* Euro races higher is first gains in seven session

* Benchmark government bonds, gold, dollar sell off

* World FX rates in 2020

By Marc Jones

LONDON, April 7 (Reuters) – World stock markets enjoyed a second day of sharp gains on Tuesday as signs of progress against the coronavirus in both Europe and the United States and some more liberal helpings of stimulus kept investors charging back in.

There was an added boost from commodity markets as oil climbed nearly 2.5% on supply cut hopes, while currency markets also came alive as a tumbling dollar sent the euro racing out of a six-session rut of falls.

Equities were where the main action was however. Japan’s Nikkei followed up Wall Street’s 7% surge on Monday [nL1N2BU2BE ]with a 2% jump as its government promised a near $1 trillion stimulus package – equal to a fifth of its GDP.

Europe was in the swing of things too. The pan-European STOXX 600 index climbed roughly 3% as the respective markets in London, Frankfurt, Paris, Milan, and U.S. futures, all bounded higher.

“A day does not a trend make, a week does not a trend make… but we think the market is bottoming out,” said Jeff Mortimer, Director of Investment Strategy at BNY Mellon Wealth Management.

“We are trying to get clients to understand that (in market performance terms) better times ahead can come more quickly then you expected.”

Worldwide, the virus has infected more than 1.3 million people and killed over 74,000, and though the numbers are still rising in many highly-populated countries, some tentative improvements have given hope.

In hardest-hit Italy and Spain, authorities have started looking ahead to easing lockdowns after steady falls in fatality rates. In the United States too, the daily number of deaths in the country’s worst-affected area, New York, has also shown signs of steadying.

With market optimism on the rise, the U.S. dollar, which has been soaking up safe-haven flows for weeks, slipped against most major currencies.

The euro shot up 0.8% to $1.0880 to snap a six-day run of falls, the pound climbed despite Britain’s Prime Minister remaining in intensive care due to the virus, and the Australian dollar jumped over 1.5% to its highest in a week.

New Zealand’s dollar rose 1.3% too, while the Japanese yen shook off an early dip to clamber up to 108.92 per U.S. dollar.

“We’ve got a nice decline in volatility across forex and equity markets. We know central banks have done a very good job in alleviating the strain in dollar markets and that’s feeding through,” said Kenneth Broux, FX strategist at Societe Generale.

“We need some time for this to settle … I think what we are seeing is a bit of mean reversion – a correction from exaggerated selling. We are in that process.”


It wasn’t only oil driving commodities markets higher either, copper punched up to a 3-week high with a 3% gain for industrial metals, while safe-haven gold wilted to $1,655 an troy ounce in the other direction.

Benchmark 10-year U.S. Treasuries and German Bunds continued to lose out too. U.S. yields – which move inverse to price – rose to 0.73% having fallen almost 9 basis points on Monday, and Bund yields were up 6-9 basis points across the curve.

Rating agency Fitch had warned on Monday that it was likely to make some multi-notch cuts to some countries’ credit scores due to the financial pressures heaped on by either tackling the virus, the collapse in oil prices, or both.

The Eurogroup of finance ministers within the single euro zone currency bloc are scheduled to meet later on Tuesday, and analysts expect more joint action to help prop up the economies of member states.

Cyprus, one of the lower-rated countries in the bloc, is marketing a seven-year and 30-year bond issuance. In Asia, Indonesia issued a 50-year bond, the longest ever timeframe in the region.

“Investors have recently been detecting growing public support for the concept of coronabonds in European Commission and ECB circles,” said DZ Bank analyst Daniel Lenz, adding that German ECB Executive Board member Isabel Schnabel was among those who appeared to voice support.

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Swiss jobless expected to rise as coronavirus hits companies – govt

ZURICH, April 7 (Reuters) – Switzerland’s jobless figures will rise in the coming months as the strict measures to contain the coronavirus pandemic could force even successful companies to shut down, a government official said on Tuesday.

“I believe unemployment will clearly increase,” said Boris Zuercher, the head of the labour department at the State Secretariat for Economic Affairs (Seco).

“The longer this situation lasts, the harder it is to get out. If it continues like this for another three or four months, it will also affect solvent companies.” (Reporting by John Revill and Silke Koltrowitz)

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Japan to issue record amount of extra bonds worth over 18 trln yen -sources

TOKYO, April 7 (Reuters) – Japan will sell a record amount of additional bonds, worth more than 18 trillion yen ($165 billion), to fund its coronavirus stimulus package, pushing overall market issuance beyond 147 trillion yen, two government sources with direct knowledge told Reuters.

The amount of extra bond issuance in the new fiscal year from April will exceed the previous record of 16.9 trillion yen issued during the 2009 global financial crisis, they said.

The sources were speaking on condition of anonymity because the debt issuance plan has not yet been finalised.

All the maturities, except for 40-year bonds, inflation-linked bonds and liquidity enhancement auctions, are subject to increase, they said.

While 40-year bonds and liquidity enhancement auctions remain unchanged from an initial plan, inflation-linked bonds will be cut by 1.2 trillion yen a year, they added.

Prime Minister Shinzo Abe has pledged to roll out a stimulus package worth 108 trillion yen ($990 billion), or a fifth the size of the economy, vowing to take “all steps” to combat deepening fallout from the coronavirus pandemic. ($1=108.8000 yen) (Reporting by Takaya Yamaguchi; Writing by Tetsushi Kajimoto; Editing by Clarence Fernandez)

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JPMorgan Q1 results announcement mistakenly released on Business Wire

April 6 (Reuters) – JPMorgan Chase & Co, the largest U.S. bank, accidentally released its first-quarter results announcement without any financial numbers on Monday via press release distribution site Business Wire.

“This was an error and we are reporting on April 14th,” JPMorgan spokesman Andrew Gray said.

The release titled “JPMorgan Chase reports first-quarter 2020 financial results” did not mention any reported metrics and was later taken down by Business Wire.

JPMorgan was one of the companies that moved from reporting its full set of results on Business Wire to its website in 2016 to avoid being hacked. (Reporting by Noor Zainab Hussain in Bengaluru and Elizabeth Dilts in New York; Editing by Aditya Soni)

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Maritime weddings cancelled amid COVID-19 pandemic impacts many, says N.S. florist

Couples across the Maritimes are having to cancel their wedding plans due to the outbreak of COVID-19.

Neville MacKay owns My Mother’s Bloomers flower shop in Halifax and said he has already had couples cancel their orders for weddings that were supposed to take place this spring and summer. He said it is impacting his business as well as others in the industry.

“There is that whole systemic thing that now the growers have to throw the flowers away and they are not growing as many so we are having to worry about the next events coming along as well,” said MacKay.

“It’s a little upsetting to postpone,” said Jessica Belliveau of Moncton, who said she was booked to be married in July. Last week, she said that she and her fiance decided to postpone their nuptials due to the pandemic.

With the New Brunswick border closed to non-essential travel and the call for mandatory social distancing to help prevent the spread of the virus, she said that moving ahead with their plans just didn’t make sense.

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“We do have people that are coming from out of province as a well as out of the country and we definitely wanted those people to be there for our day,” said Belliveau.

Meanwhile, MacKay is expecting to get more cancellations in the coming weeks as the wedding season approaches. He says he is working with couples who want to rebook to a later date and will provide a refund if requested.

He that some people have questioned why he has chosen to keep his flower shop open amid the outbreak, saying that is not an essential service. But he said sending flowers is a way for family members to reach out to loved ones who they cannot be with amid the pandemic.

“I had someone who ordered flowers for their mother who was in palliative care and they couldn’t go and see her on her last few days but she loved flowers so they sent their love that way,” he said.

He says he’ll continue to help people send “floral hugs” from afar for as long as the pandemic persists.

Questions about COVID-19? Here are some things you need to know:

Health officials caution against all international travel. Returning travellers are legally obligated to self-isolate for 14 days, beginning March 26, in case they develop symptoms and to prevent spreading the virus to others. Some provinces and territories have also implemented additional recommendations or enforcement measures to ensure those returning to the area self-isolate.

Symptoms can include fever, cough and difficulty breathing — very similar to a cold or flu. Some people can develop a more severe illness. People most at risk of this include older adults and people with severe chronic medical conditions like heart, lung or kidney disease. If you develop symptoms, contact public health authorities.

To prevent the virus from spreading, experts recommend frequent handwashing and coughing into your sleeve. They also recommend minimizing contact with others, staying home as much as possible and maintaining a distance of two metres from other people if you go out.

For full COVID-19 coverage from Global News, click here.

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European Commission drafting new proposal to let states aid virus-hit companies- FT

April 6 (Reuters) – The European Commission is planning to let member states help companies directly impacted by the coronavirus outbreak through an injection of equity, the Financial Times reported here on Monday, citing people with knowledge of the proposal.

The new scheme would call on European Union member states to “provide further support in equity or hybrid capital instruments” to such businesses, according to the report.

The proposal, which the FT said was being drafted, would add to a temporary framework announced last month that allowed companies to receive state grants up to 500,000 euros ($539,900) or subsidised state guarantees on bank loans.

Under the new proposal, which may be announced later this week, the financial support would be conditional on companies meeting certain standards of good governance and giving commitments on how they would use the aid, the newspaper added.

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Lebanese banks set 2,600 pounds to dollar rate for small accounts source

BEIRUT, April 6 (Reuters) – Lebanese banks are to apply an exchange rate of 2,600 pounds per dollar for withdrawals from small accounts of up to 5 million Lebanese pounds, a central bank source said on Monday, in the implementation of a new circular issued on Friday.

Lebanon is still applying an official peg of 1,507.5 pounds to the dollar for bank transactions and critical imports, the governor said on Friday.

But the circular issued on Friday said deposits of $3,000 or less could be withdrawn in Lebanese pounds at a “market” rate, allowing small depositors to cash out despite tight banking controls. It also allowed for the paying out of deposits of 5 million Lebanese pounds or less.

A senior banking source said this rate would be fixed on a weekly basis and had this week been fixed at the 2,600 rate.

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Wall St looks for light at end of tunnel, sees risk stocks will re-test lows

NEW YORK, April 5 (Reuters) – Wall Street analysts and investors see a risk that stocks could retest recent lows in the coming days or weeks as they worry about the spread of the virus and its impact on the economy, although some spot glimmers of light at the end of the tunnel.

Wall Street’s main indexes fell more than 1.5% on Friday as the coronavirus abruptly ended a record U.S. job growth streak. The S&P 500 closed at 2,488.65, after rebounding about 13% from its intra-day late-March low, although it is still down more than 26% from its mid-February record high.

Markets have shown some signs of stabilization as investors parse a broad range of signals for clues on the trajectory markets may take in coming weeks.

Some point to easing volatility and improving liquidity in fixed-income markets as signs that the worst of the sell-off may be over. Investor sentiment, often seen as a contrarian indicator, is one signal pointing to an eventual turnaround in U.S. stocks. Still, markets remain turbulent and far off their highs.

U.S. Surgeon General Jerome Adams warned on Fox News Sunday that “this is going to be the hardest and the saddest week.”

However, there have been some positive signs. Michael Hewson at online trading company CMC Markets said that U.S. futures may get a lift on Sunday by a “fall in the death rate in NY” and some other places.

New York Governor Andrew Cuomo said deaths had fallen slightly from the prior day, even though he cautioned that it was not yet clear whether the crisis in the state was reaching a plateau.

Here is a roundup of some analyst and investor views from the past few days:

– Julian Emanuel at U.S. broker-dealer BTIG said in a research note on Sunday that if history is any sort of guide, he expects a “retest of the March lows in April, as the public health and economic bad news is likely to reach its parabolic peak.”

Emanuel said that part of what could make a bottom for stocks in the coming days is a realization that the real reopening date for the economy is not the end of April but rather the end of May.

Emanuel added that stocks often trough “when the headlines are most adverse, hope scarce, and emotions high” and said that as investors, “we want to be ready for that time, and we think it is coming in April.”

Emanuel pointed to one “uncommon phenomenon indicative of systemic hedging,” saying the S&P 500 VIX, which measures volatility, is currently above the Nasdaq 100 VIX, which is “usually reserved for times of market stress.”

– Christopher Wood at Jefferies wrote in a research note dated Friday that they are still expecting, at a minimum, “a re-test of the previous low on the S&P 500”, as well as a re-test of the 10-year Treasury bond yield low, and forecasts that will coincide with a renewed rally in the U.S. dollar.

Wood wrote that “markets are heading into the peaking of the bad news in Europe at the same time as cases in Britain and America, both behind in terms of the virus cycle because of the failure to lockdown earlier, continue to rise sharply,” Wood wrote. “This news flow is likely to unnerve investors in the short-term for understandable reasons.”

Still, Woods said “when that peaking out does occur, it should generate a decent tradeable rally.”

Jefferies equity strategist Steven DeSanctis, however, in a separate note said, said that hedge funds’ de-risking “seems to be behind us.”

– Andrew Slimmon, Managing Director and Senior Portfolio Manager on all long equity strategies at Morgan Stanley Investment Management, wrote in emailed comment on Friday that he also expects some “retest of the lows” but said it is possible that “we will not get back to the lows.”

He charts three stages of bear markets – the “panic low,” the “relief rally” and the “retest” and said the market is currently in the second stage. He sees financial services and consumer stocks as areas that are particularly attractive.

– Brad McMillan, Chief Investment Officer for Commonwealth Financial Network, wrote in emailed comments on Friday that “April is going to be a tough one, with lots of real—and very scary—headlines. The market will certainly respond to those headlines, so we should expect more volatility and quite possibly a retest of the March lows.”

– Michael Purves, at Tallbacken Capital Advisors, wrote on Friday that the VIX curve appears to be reflecting a few high level but important scenarios/risks, of rolling U.S. blackouts as incremental populations get hot, and that U.S. health policy is less cohesive than it is in other countries.

Purves also said there is “an ever growing number of second order impacts from this economic shut down which may not reveal themselves for several months (fiscal stimulus implantation risks, food inflation, labor strikes, rising political risk, unsuccessful reboot of Asian economies, re-outbreak of Corona cases etc.).”

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Britain must not ease coronavirus restrictions too soon – Deputy CMO

LONDON, April 5 (Reuters) – Britain should not start to lift restrictions on social contact until it is clear that coronavirus transmission is in retreat, otherwise a second wave could occur, England’s Deputy Chief Medical Officer Jenny Harries said on Sunday.

“The very last thing we would want to do is to have put in all of this effort, with everybody trying to do the right thing – almost everybody – across the country, and then finally lift the lid too early and we have a second spike,” she said.

“It will waste the effort we have put in. And we will still need to get over the first hump of the epidemic curve, and then look at the detail (of restrictions).” (Reporting by Paul Sandle and David Milliken; Editing by Angus MacSwan)

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UPDATE 1-China frees up $56 bln for virus-hit economy by slashing small banks' reserve requirements

* RRR cut by 100 bps for mid-sized, small banks

* To be implemented in two phases from April 15, May 15

* Frees up $56 bln in cash to spur lending

* Cuts rate on excess reserves for banks to 0.35% from 0.72%

* More easing steps expected to support economy

BEIJING, April 3 (Reuters) – China’s central bank said on Friday it was cutting the amount of cash that small and mid-sized banks must hold as reserves, releasing around 400 billion yuan ($56.38 billion) in liquidity to shore up the economy, which has been badly jolted by the coronavirus crisis.

The latest stimulus move comes as the world’s second-largest economy looks likely to shrink for the first time in 30 years and hopes for a quick recovery are being soured by the rapid spread of the disease worldwide, crushing global demand.

The People’s Bank of China said on its website it will cut the reserve requirement ratio (RRR) for those banks by 100 basis points (bps) in two equal steps, the first effective as of April 15 and the second as of May 15.

China has about 4,000 small and mid-sized banks. The latest cuts would lower their RRR to 6%.

In addition, the interest rates on financial institutions’ excess reserves with the central bank would be reduced to 0.35% from 0.72%, effective April 7, the PBOC said.

The RRR cut was flagged by the cabinet on Tuesday along with other support measures as Beijing tries to cushion the economic blow from the pandemic, which is fanning worries about heavy job losses.

While most of the country’s factories are believed to be up and running again, though not at normal levels, a private survey earlier on Friday suggested services companies are still struggling to get back on their feet and cut jobs in March at the fastest pace since at least 2005.

Many are small, privately owned firms with less cash to see them through a prolonged downturn than large, state-owned enterprises.

The export sector is also facing a fresh shock, as the swift spread of the virus around the world prompts many countries to impose draconian containment measures similar to those used in China. Nomura estimates China could lose 18 million export-related jobs in the next one to two quarters as shipments contract 30%.

The latest RRR cut would be the third so far this year and the 10th since early 2018, when the economy was starting to slow under the weight of intensifying U.S.-China trade frictions.

The central bank has been easing monetary policy since the virus outbreak escalated in January, cutting the benchmark lending rate and telling banks to offer cheap loans and payment relief to firms that have been hardest hit by the outbreak and anti-virus measures.

While demand for credit is believed to be falling in many countries as the disease takes a heavy toll on businesses, China still has strong control over its banking system.

Chinese banks issues new loans totalling nearly 7 trillion yuan ($989 billion) in the first quarter, said Zhou Liang, vice head of the China Banking and Insurance Regulatory Commission (CBIRC) earlier in the day.

The move to slash the interest rates on excess reserves for banks is aimed at boosting the efficiency for banks to use the funds and better serving small and micro-firms, said the PBOC.

The rate cut on excess reserves indicates that the PBOC is very keen to lower the credit costs for companies, said Commerzbank economist Hao Zhou. PBOC last reduced the rates to 0.72% from 0.99% during the global financial crisis in 2008.

“The rates for excess reserves are also seen as the floor of the ‘rates corridor’ in China. In this sense, today’s cut has opened a big door for further cut to MLF, which is the ceiling of the corridor.”

After widespread factory closures and travel restrictions imposed by Beijing to contain the spread of the coronavirus that has killed more than 3,300 in the country, businesses in the country have reopened and life for millions of people has started to slowly return to normal.

But economists are forecasting a steep contraction in China’s first quarter gross domestic product, with some expecting a year-year slump of 9% or more – the first such contraction in at least three decades.

Policy sources told Reuters that Chinese government could expand 2020 budget deficit to a record high and was considering lowering its economic growth target for 2020 given the prolonged impact of the pandemic. But one central bank adviser has suggested that a growth target not even be set this year due to all the uncertainty. (Reporting by Lusha Zhang, Stella Qiu and Kevin Yao; Editing by Kim Coghil)

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