Daily market review

United States

An enormous late-session collapse in oil prices along with weak corporate results depressed equities Monday. The Dow industrials fell 2.4 percent, the S&P 500 fell 1.8 percent, and the NASDAQ lost 1.0 percent.

West Texas Intermediate's Nymex contract for spot delivery expiring tomorrow fell intraday to minus $40.32 per barrel, down $55.90 for the largest daily plunge on record. Negative prices have never been seen in WTI, highlighting the unprecedented oversupply of the domestic crude oil market, the lack of storage capacity, and the utter unwillingness to take delivery at any price.

Among sectors, energy suffered the most, with supermajor oil companies hit hard: Exxon Mobil down 4.7 percent and Chevron down 4.2 percent.

Markets were also not pleased with widespread media reports that US testing and tracing capabilities are lagging expectations for a near-term resumption of business activities. Real estate and utilities lagged, along with materials, industrials, and financials, especially asset managers and money center banks. Outperformers included consumer staples, technology, consumer discretionary, communications services, and health care fared best, led by biotech.

Among companies reporting, United Airlines fell 4.4 percent after a revenues miss and reporting the scale of its capacity cuts, and its expectations for government support. Boeing fell 7 percent after the China Development Bank canceled a big order, and on a downgrade from Citi.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell by US$2.34 to US$25.93, while spot gold rose US$15.24 to US$1,698.06. The US dollar rose against most major currencies. The US Treasury 30-year bond yield fell 4 basis points 1.22 percent while the 10-year note yield fell 2 basis points to 0.62 percent.


Gains in health care stocks helped equities recover from early declines to end mostly higher Monday. The Europe-wide STOXX 600 rose 0.7 percent, the German DAX gained 0.5 percent, the French CAC rose 0.7 percent, and the UK FTSE-100 was up 0.5 percent.

More positive news of slowing coronavirus cases in Europe and plans for easing lockdowns provided support, but expectations for bleak corporate results undercut market sentiment, along with falling oil prices.

Along with health care, personal & household goods, media, chemicals, and technology outperformed, while laggards included autos, travel, utilities, real estate, oil & gas, construction, and basic resources.

Novartis, the Swiss pharma, edged up 0.1 percent after getting FDA permission for a big test of its hydroxychloroquine drug against COVID-19. Philips, the health care products company, rose 6 percent after a favorable outlook. Vivendi, the French media company, rose 4 percent after a revenues beat and positive comment on its prospects in light of COVID-19. On the downside, sunglasses maker EssilorLuxottica fell 0.8 percent after warning on the virus impact and suspending its dividend.

Asia Pacific

Most major Asian markets closed lower Monday, with a sharp fall in global oil prices during the regional trading session providing some of the direction to investor sentiment. Regional coronavirus news was mixed Monday, with new cases high in Singapore and elsewhere in Southeast Asia but low in Korea and Hong Kong with New Zealand authorities announcing some easing of restrictions.

Australia's All Ordinaries index was among the worst performers in the region, closing down 2.3 percent, with energy companies and major banks posting large declines. Japan's Nikkei and Topix indices closed down 1.2 percent and 0.7 percent respectively, while Hong Kong's Hang Seng index fell 0.2 percent.

The Shanghai Composite index outperformed with an increase of 0.5 percent after the People's Bank of China lowered the one-year loan prime rate by 20 basis points from 4.05 percent to 3.85 percent at its monthly review. The equivalent five-year rate was cut by 10 basis points from 4.75 percent to 4.65 percent. These rates were left unchanged in March after they were cut in February.

Japan's merchandise trade surplus narrowed from a revised ¥1,108.8 billion in February to ¥4.9 billion in March. Exports fell 11.7 percent on the year in March after dropping 1.0 percent in February, more than the consensus forecast for a decline of 5.5 percent, while imports fell 5.0 percent on the year after dropping 13.9 percent previously, less than the consensus forecast for a decline of 9.9 percent. Demand was again weak across major trading partners, while Japan's imports from most other countries in the region also fell, highlighting the impact of the global coronavirus pandemic on regional supply chains.

Looking ahead*

On Tuesday in Asia/Pacific, Reserve Bank of Australia meeting minutes are due. In Europe, Swiss merchandise trade, UK labor market, and German ZEW reports are scheduled. In North America, it's Canadian retail sales, and in the US, the existing home sales report.

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