Despite talks of reopening businesses around the globe, investors are concerned that dismal economic data is painting a bleak picture, and that the current economic downturn will not be easily solved, even if businesses reopen in the near term (the practicality of which is still highly questionable in most countries across the globe).
One number that may hint to the extend of the economic damage is the U.S. unemployment number, which saw millions of new filings, bringing the number of total claims to over 20 million in the past month. Additional jobs data will be published on Thursday but is expected to show additionally distressing numbers. According to Reuters analysts, an additional 20 million U.S. citizens are expected to file for unemployment through May, after which a drop off in numbers will begin. The analysts attribute these spikes to difficulties in processing unemployment applications due to the increased number of filings. On Wednesday, data out from the U.S. showed a decline in retail sales in March (hardly surprising considering the near countrywide lockdowns), as well as the steepest decline in factory output since 1946. Analysts are predicting that the U.S. economy contracted by as much as 10.8 percent in Q1 2020, the steepest contraction since 1947, and that the stimulus package of over $2 trillion will not be sufficient to prop up the economy. U.S. citizens started receiving stimulus checks via direct deposit on Wednesday.
Asian benchmarks were mostly lower on Thursday following a day of declines on Wall Street which saw the Dow Jones Industrial Average and the Nasdaq both closing over 1 percent and the S&P 500 closing down 2.2 percent. As of 1:37 p.m. HK/SIN on Thursday, Japan’s Nikkei 225 had eased 1.44 percent, while Australia’s ASX 200 eased 1.48 percent. South Korea’s Kospi was down a modest 0.17 percent, while China’s benchmarks eked out slight gains. China’s benchmark indexes were mostly flat. The selling in Asia was prompted by forecasts from the IMF that there will be no economic growth in Asia in 2020, for the first time in 60 years. CNN also reported on Thursday that the IMF has received requests for bailouts from 102 countries thus far. Kristalina Georgieva, managing director of the IMF, has said that all bailouts will be predicated on the payment of healthcare workers to make sure that all healthcare systems are functioning properly and that first responders are properly protected.
Currency Movements
The U.S. dollar held onto its recent gains on Thursday as traders favored the dollar as is common in times of uncertainty. The dollar index was up 0.39 percent to 99.84 .DXY, with the dollar’s broadest gains coming against the yen, where it was up 0.37 percent to 107.87. The British pound eased against the greenback, down 0.256 to $1.248, while the euro eased 0.248 percent to $1.088.