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On 3 April 2020 - US, Europe off as weak jobs data signal virus impact; Asia soft

Anne D Picker

Anne D Picker - Econoday

Oil prices up as markets eye exporter meeting Monday

US markets

Equities retreated Friday as the US jobs report surprised to the downside, even as markets expect much worse employment news ahead, and the global spread of COVID-19 continued. The Dow industrials fell 1.7 percent, while the S&P 500 and NASDAQ 100 both fell 1.5 percent.

In economic data, US nonfarm payrolls fell a sharper-than-expected 701,000 in March, in a report showing only the beginning of the coronavirus crisis as the sample was taken early in the month. The unemployment rate, in the largest monthly increase in 45 years, jumped 0.9 percentage points to 4.4 percent. Employment in leisure and hospitality fell by 459,000, mainly in food services and drinking places.

All stock sectors declined, with energy, utilities, and financials lagging the most, while health care and materials did better, and consumer staples fared best. Oil prices rose, but were well off their highs, after news suggesting Russia might cooperate with OPEC to cut oil output. Major oil exporters including Russia and Saudi Arabia are scheduled to convene Monday.

In company news, Tesla rose 5.6 percent after reporting better deliveries in the first quarter. Chewy, the pet food company, fell 4.8 percent after pulling its 2020 guidance. Lennar, the builder, slipped 0.1 percent as it warned on slowing sales. Cree, the lighting company, declined 1.1 percent after cutting its guidance. Leggett & Platt, a diversified manufacturer, fell 6.2 percent after reporting a big drop in demand. Disney, the entertainment leader, fell 3.2 percent, and General Electric fell 2.5 percent after both furloughed staff.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose by US$4.53 to US$34.38, while gold rose US$6.32 to US$1,621.19. The US dollar rose against most major currencies. The US Treasury 30-year bond yield fell 1 basis point to 1.24 percent while the 10-year note yield was up 2 basis points to 0.61 percent.

European markets

Equities declined Friday as bad economic data and bleak corporate news showed the coronavirus toll. The Europe-wide STOXX 600 fell 1.0 percent, the German DAX eased 0.5 percent, the French CAC dropped 1.6 percent, and the UK FTSE-100 fell 1.2 percent. Reports that virus cases in Europe may be reaching a plateau provided some relief, but risk appetite remained depressed.

Financials led the decline as markets expect more dividend suspensions and buyback suspensions. Energy stocks fell back after Thursday’s rally as expectations faded for output cuts large enough to bring production in line with falling demand. Automakers fell on demand worries. On the positive side, health care stocks held up better as a conservative play, and retail stocks were bolstered by surprisingly positive Eurozone retail sales figures for February. Insurance stocks were hit by regulators' calls to suspend dividends. Dutch insurers Aegon (off 8.5 percent), and NN Group (down 6.5 percent) led decliners.

In economic data, Eurozone economic activity plunged in March. The flash composite output index was revised down 1.7 points to 29.7, making for its steepest-ever decline and a record low. Separately, the UK flash composite output index was revised down 1.1 to 36.0 in the final March report, 17.0 points below its final February mark and a new series low.

Asia Pacific markets

Most major Asian markets closed lower Friday after weak PMI survey data, though moves were relatively small. Performance diverged widely across the region over the week. Japan’s Nikkei and Topix indices were little changed on the day, flat and down 0.4 percent respectively, but recorded some of the biggest losses over the week, down 8.1 percent and 9.2 percent respectively. The Shanghai Composite index fell 0.6 percent on the day and 0.3 percent on the week, while Hong Kong’s Hang Seng index closed down 0.2 percent on the day and fell 1.3 percent on the week. Australia’s All Ordinaries index was one of the weaker performers on the day, down 1.6 percent, but posted a solid gain of 4.8 percent over the week.

PMI survey data for March published Friday showed activity contracted sharply in the Japanese services sector and across the Hong Kong and Singapore economies but showed that conditions in China’s services sector weakened at a slower pace. The Markit PMI Services sector business activity index fell to 33.8 in March, above the flash estimate of 32.7 but confirming a sharp drop from 46.8 in February. Combined with a drop in the headline index for the Japanese manufacturing sector, published earlier in the week, this took the composite index from 47.0 to 36.2, its lowest level since the earthquake and tsunami of 2011. The equivalent index for the Chinese services sector increased from a record low of 26.5 in February to 43.0 in March, perhaps indicating that conditions there may stabilize soon. The headline index for China’s manufacturing sector rose from 40.3 to 50.1, taking the composite index from 27.5 to 46.7.

Economy-wide PMI surveys for Hong Kong and Singapore confirmed the scale of the economic impact from the coronavirus pandemic and indicate that both will experience recession conditions for the first half of the year. The headline index picked up slightly in Hong Kong, up from 33.1 in February to 34.9 in March but still indicating a sharp contraction in activity, while the equivalent index for Singapore fell from 47.0 to a survey-record low of 33.3.

Retail sales in Australia rose 0.5 percent on the month in February after falling 0.3 percent in January, with year-on-year growth picking up from 2.2 percent to 5.7 percent. Officials noted that spending on groceries, pharmaceuticals, and other household items increased significantly in response to the coronavirus crisis. They also pointed out, however, that businesses impacted by the downturn in tourism have already seen weaker sales and that those impacted by curbs on trading and other social activities will likely report weaker sales in March and beyond.

Looking forward

Central Bank activities

Apr-06

Canada

BOC Business Outlook Survey

Apr-07

Australia

RBA Policy Announcement

Apr-08

US

FOMC Minutes

Apr-09

Eurozone

ECB Minutes

The following indicators will be released this week...

Europe

Apr-06

Germany

Manufacturers' Orders (February)

 

UK

PMI Construction (March)

Apr-07

France

Merchandise Trade (February)

 

Germany

Industrial Production (February)

 

Italy

Retail Sales (February)

 

UK

Halifax HPI (March)

Apr-09

Germany

Merchandise Trade (February)

 

Italy

Industrial Production (February)

 

UK

Industrial Production (February)

 

 

Monthly GDP (February)

Apr-10

France

Industrial Production (February)

Asia Pacific

Apr-07

Australia

Merchandise Trade (February)

 

Japan

Household Spending (February)

Apr-08

Japan

Machine Orders (February)

Apr-10

China

CPI (March)

 

 

PPI (March)

 

India

Industrial Production (February)

 

Japan

PPI (March)

Americas

Apr-07

Canada

Ivey Purchasing Managers Index (March)

 

US

Consumer Credit (February)

 

 

JOLTS (February)

Apr-08

Canada

Housing Starts (March)

Apr-09

Canada

Labor Force Survey (March)

 

US

Consumer Sentiment (April p)

 

 

Jobless Claims (Week of April 4)

 

 

PPI-FD (March)

Apr-10

US

CPI (March)

 

 

Treasury Budget (March)

Global stock markets

 

Index

3 Apr 2020

Daily Change

% Change Daily

North America

United States

Dow

21052.53

-360.91

-1.7

 

NASDAQ

7373.08

-114.23

-1.5

 

S&P 500

2488.65

-38.25

-1.5

Canada

S&P/TSX Comp

12938.3

-159.54

-1.2

Europe

UK

FTSE 100

5415.5

-64.72

-1.2

France

CAC

4154.58

-66.38

-1.6

Germany

XETRA DAX

9525.77

-45.05

-0.5

Italy

MIB

16384.35

-449.68

-2.7

Spain

Ibex 35

6581.6

7.50

0.1

Sweden

OMX Stockholm 30

1404.59

-22.60

-1.6

Switzerland

SMI

9242.44

-28.52

-0.3

Asia/Pacific

Australia

All Ordinaries

5106.94

-81.71

-1.6

Japan

Nikkei 225

17820.19

1.47

0.0

 

Topix

1325.13

-4.74

-0.4

Hong Kong

Hang Seng

23236.11

-43.95

-0.2

S. Korea

Kospi

1725.44

0.58

0.0

Singapore

STI

2389.29

-63.74

-2.6

China

Shanghai Comp

2763.99

-16.65

-0.6

Taiwan

TAIEX

*

*

*

India

Sensex 30

27590.95

-674.36

-2.4

*Markets closed

 

 

 

Note: all releases are listed in local time.

Important Information

Econoday Inc. is a US company that provides financial commentary and indicators to industry professionals. All information provided and views expressed are those of Econoday. Reference in this document to specific securities should not be construed as a recommendation to buy or sell these securities, but is included for the purposes of illustration only. Past performance is not a reliable indicator of future results. The value of investments can go down as well as up and investors may not get back the amount invested.