(Bloomberg) -- Oil demand is getting hammered at a faster pace than anyone had predicted and landlocked crude production in the U.S., Russia and Canada is most vulnerable, according to Goldman Sachs Group Inc.Consumption will drop by 26 million barrels, or 25%, this week as social-distancing measures to contain the coronavirus now impact 92% of global GDP, analysts including Jeff Currie and Damien Courvalin said in a note. There’s been at least 900,000 barrels a day of announced shut-ins at the wellhead, with the true number likely higher and growing by the hour, they said.“The ultimate magnitude of these shut-ins, which is still unknown, will likely permanently alter the energy industry and its geopolitics,” the analysts said. Landlocked crude prices are heading into negative territory and will eventually create an inflationary oil supply shock because so much production will have been halted, they said.See also: The Global Oil Market Is Broken,...
(Bloomberg) -- China’s trillion dollar asset-management market opens wider this week, forcing BlackRock Inc., Vanguard Group Inc. and other global firms to make a strategic decision: Go it alone or work with an entrenched local partner.While the further liberalization of the investment banking and money management industries in China has been overshadowed by the coronavirus crisis, wealth firms are nonetheless laying out plans to tap an overall market poised to reach $30 trillion in assets by 2023, according to consultant Oliver Wyman. For retail public funds alone, the market could reach $3.4 trillion over the same period, says Deloitte LLP.Starting April 1, money managers can apply for licenses to set up wholly-owned mutual fund firms for the first time. Vanguard and BlackRock are among firms going that route, people familiar have said. Other options include boosting ownership of existing joint venture partnerships to 100%, as JPMorgan Chase & Co. plans to...
(Bloomberg) -- Gold declined after its biggest weekly advance since 2008 amid investor caution on policies aimed at mitigating the impact of the global coronavirus pandemic.The dollar climbed and Asian equities fell after the top American infectious disease expert said deaths from the coronavirus in the world’s largest economy may reach 200,000. Bullion’s muted trading comes after the market was thrown into turmoil last week as the health crisis disrupted supply chains, creating a squeeze in futures as sellers’ capacity to meet commitments to deliver the metal was curtailed.Volatility has spiked this month as, in addition to the supply squeeze, some investors sold the metal to raise cash to cover losses elsewhere. The dollar has also emerged as a preferred haven, heading for its best month since late-2016, amid concerns over liquidity and funding conditions across markets.“Liquidity will likely be the key focus in the next couple of days as we...
(Bloomberg) -- U.S. stock futures erased losses, as traders reacted to China’s rate cut on seven-day reverse repurchase agreements on Monday. As part of the stimulus, the People’s Bank of China injected 50 billion yuan ($7.1 billion) into the banking system. Contacts on the S&P 500 expiring in June rose 0.1% at 1:41 p.m. in Tokyo on Monday, erasing a drop that exceeded 3% in early trading. China’s central bank cut the interest rate it charges on loans to banks by 20 basis points, the biggest amount since 2015 as authorities ramp up their response to cushion an economic slowdown.U.S. Futures have “started picking up following China’s extensive cut of 20bps to 7 day repo rate, providing some support for the market,” said Jingyi Pan, market strategist at IG Asia Pte.Dramatic swings have been the rule in global markets for five weeks as investors tried to price in an outbreak that...
(Bloomberg) -- U.S. equity futures reversed an opening decline to trade higher Monday as investors took in the latest developments on the coronavirus spread. Asian shares pared losses.In a mixed day for risk assets, the dollar snapped a four-day slide, while the yen advanced along with sovereign bonds. Oil in New York dropped below $20 at one point. Japan’s Topix underperformed as a majority of its members traded without the right to the latest dividend. The yuan slid as China’s central bank lowered short-term funding rates and injected cash into its financial system. Singapore’s dollar fluctuated after the monetary authority there -- which uses the exchange rate as its main policy tool -- announced a modest easing, reducing the slope of its currency band to zero while affirming the current level. Emerging currencies including South Africa’s rand and Mexico’s peso tumbled amid concerns about debt downgrades.The latest news on the coronavirus...
(Bloomberg) -- Strategists at JPMorgan Chase & Co. have concluded that most risk assets -- a universe that typically includes stocks and credit -- have seen their low points for the recession that’s gripped economies around the world.Conditions that JPMorgan had set for market stabilization and revival have largely been met, with recession-like pricing, a reversal in investor positioning and extraordinary fiscal stimulus, strategists led by John Normand wrote in a note Friday. Coronavirus infection rates remain a “wild card,” as they remain high even if they’re “slowing” in the U.S. and Europe.“Risky markets should remain volatile as long as infection rates create uncertainty about the depth and duration of the Covid recession, but enough has changed fundamentally and technically to justify adding risk selectively,” Normand wrote. “Most risky markets have probably made their lows for this recession, except perhaps oil and some EM currencies beset by debt-sustainability issues.”Most risk assets...
