09:08 (IST)
Crude claws back into positive territory
US crude oil bounced back into positive territory on Tuesday, after a historic plunge below zero that shocked investors and pushed down stock prices and Asian currencies.
Futures for May delivery of West Texas Intermediate rose nearly $39 but were still just $1.76 a barrel, after a storage squeeze and collapsing fuel demand crushed prices to eye-popping lows.
The contract expires at the end of trade on Tuesday, which is pushing investors to clear them from their books at any price, and June prices at $22 per barrel point to some relief.
But the collapse highlighted intense disruptions globally as the coronavirus pandemic and lockdowns paralyse the world economy, and augurs badly for a swift return to growth.
Asian equity markets followed Wall Street lower. MSCI’s broadest index of Asia-Pacific shares outside Japan fell half a percent. Japan’s Nikkei fell 1%, while bonds and the dollar held gains.
09:05 (IST)
Oil prices rebound: US crude futures show modest rise from $0 a barrel on Monday
Oil prices rebounded on Tuesday, with US crude turning positive after trading below $0 for the first time ever, but gains were capped amid unresolved concerns about how the market can cope with fuel demand decimated by the coronavirus pandemic.
US West Texas Intermediate (WTI) crude for May delivery was up $38.73 at $1.10 a barrel by 0117 GMT after settling down at a discount of $37.63 a barrel in the previous session.
The May contract expires on Tuesday, while the June contract, which is more actively traded, jumped $1.72 cents, or 8.4 percent, to $22.15 a barrel.
Global benchmark Brent crude for June delivery was up 49 cents, or 1.9 percent, at $26.06 per barrel.
“
Demand destruction from COVID-19 will see a slower expected reopening of the U.S. economy,” said Edward Moya, senior market analyst at broker OANDA, predicting a weak period for oil prices. “The WTI crude June contract was able to hold the $20 a barrel level and is seeing a modest gain following the painful rollover of the May contract.”
09:03 (IST)
South Korean currency falls
#BREAKING | From CNBC: Korean #Won falls sharply on against dollar on unconfirmed reports that North Korean leader Kim Jong Un is seriously ill pic.twitter.com/cmyTSwldd8
— CNBC-TV18 (@CNBCTV18Live) April 21, 2020
08:47 (IST)
Global stocks sink on oil price crash and earnings anxiety
Deepak Jasani, Head Of Research, HDFC Securities said: "Indian markets could open lower on Tuesday following weak Asian markets and negative US markets on Monday following oil futures crash.
"US stocks finished near session lows Monday as investors watched oil futures crash, overshadowing optimism about plans for a staggered easing of global lockdowns in the wake of the COVID-19 pandemic. Senators also were in a deadlock over potential additional emergency funds for small businesses.
"Plunging oil prices overshadowed optimism over signs of peak infections in parts of the world, including New York, and plans from Europe, notably Germany, to begin unwinding the recent global economic pause due to the pandemic.
"West Texas Intermediate crude for May delivery finished down $55.90 on Monday, more than 306%, to settle deeply in negative territory at -$37.63 a barrel on the New York Mercantile Exchange, meaning that you have to pay to get someone to take barrels of oil off your hands amid a growing supply glut and storage shortage. The June contract for West Texas Intermediate, the U.S. benchmark, settled at a much higher $20.43 a barrel.
"Asia shares were poised to track a Wall Street tumble on Tuesday after U.S. crude futures turned negative for the first time in history, crushed by a spectacular collapse in oil demand as the coronavirus pandemic derails the global economy.
"Nifty closed on flat note on Monday (down 4.9 points to 9261.85) ending a volatile session. Technically, the Nifty seems to be consolidating in a range. Further directional cues are likely to emerge on a move beyond the 9,128-9,390 trading range." Jasani said.
Washington: Asia shares were poised to track a Wall Street tumble on Tuesday after US crude futures turned negative for the first time in history, crushed by a spectacular collapse in oil demand as the coronavirus pandemic derails the global economy.
#CNBCTV18Market | Asian markets see declines; Nikkei & Hang Seng trade more than 150 points lower pic.twitter.com/CYpnMFMPzn
— CNBC-TV18 (@CNBCTV18Live) April 21, 2020
Global equity markets slid and bond prices rose as traders dumped the expiring crude futures for May, leading the contract to plunge 306 percent to lows never before seen.
“This is clear evidence of demand destruction,” said Michael McCarthy, chief strategist at broker CMC Markets in Sydney.
“It’s not just relevant to energy markets, this very clear evidence of economic damage is very likely to dampen sentiment.
May futures settled at minus $37.63 a barrel. Over the course of the day prices declined $55.90 a barrel and sank as low as $40.32.
The June contract for West Texas Intermediate, the US benchmark, settled at a much higher $20.43 a barrel.
North Sea Brent, the international benchmark, was at $25.95, down 7.59 percent on the day.
In equities markets, Japan’s Nikkei futures were up 0.52 percent at 23:19 GMT while Australian S&P/ASX 200 futures were down 0.99 percent at 20:59 GMT.
The Nikkei 225 index closed up 3.15 percent at 19,897.26 on Monday. The futures contract is down 2.02 percent from that close.
MSCI’s gauge of stocks across the globe shed 1.15 percent, following broad declines in Asia and slight gains in Europe driven by the healthcare sector.
On Wall Street, the Dow Jones Industrial Average fell 592.05 points, or 2.44 percent ,to 23,650.44. The S&P 500 lost 51.4 points, or 1.79 percent, to 2,823.16. The Nasdaq Composite dropped 89.41 points, or 1.03 percent, to 8,560.73.
Even with Monday’s decline, the S&P 500 has rallied 26.1 percent from its March low, thanks in part to the extreme easing by the Federal Reserve and a $2.3 trillion stimulus package passed by Congress.
Yet analysts are likely underestimating the impact of the global economic lockdown on corporate earnings, some argue.
The United States has by far the world’s largest number of confirmed coronavirus cases, with more than 750,000 infections and over 40,500 deaths, according to a Reuters tally.
The debate over when to lift restrictions to curb the pandemic intensified in the United States, with protesters describing mandatory lockdowns as “tyranny” and health workers and officials portraying them as a matter of life and death.
In Washington, lawmakers were squabbling over a possible $450 billion-plus deal to provide more aid to small businesses and hospitals hurt by the crisis. Senate Republican leader Mitch McConnell said a vote could take place on Tuesday.
US President Donald Trump described the historic crude price drop as short-term and stemming from a “financial squeeze,” adding the administration would consider stopping oil shipments from Saudi Arabia to lift the market.
The dollar edged higher as tumbling crude prices pressured oil-linked currencies.
Bond markets suggested investors expect tough economic times ahead. Benchmark 10-year notes last rose 12/32 in price to yield 0.6179 percent, from 0.656 percent late on Friday, compared with 1.91 percent at the start of the year.
Selling pressure on Italian government bonds has returned in the past week, undoing some of the benefits of the European Central Bank’s massive bond-buying scheme, after euro zone politicians failed to agree to common debt issuance as a means of addressing the crisis.
Meanwhile, Italian Prime Minister Guiseppe Conte on Monday repeated calls for the EU to issue common euro zone bonds to demonstrate the bloc’s solidarity.
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