GLOBAL NEWS:
U.S. President Donald Trump warned on Monday that he may move the Republican National Convention set for August from North Carolina if the event faces state social distancing restrictions due to the coronavirus. The COVID-19 pandemic has forced Trump and presumptive Democratic nominee Joe Biden to halt campaign rallies. Some have raised concerns that the large formal nominating conventions that are typically packed with delegates could raise safety issues. Trump said on Twitter that if Democratic Governor Roy Cooper does not immediately answer “whether or not the space will be allowed to be fully occupied,” then the party will find “with all of the jobs and economic development it brings, another Republican National Convention site.” The conventions include prime-time TV speeches that serve to kick off the final sprint toward the November presidential election. The Republican event is set to start Aug. 24 in Charlotte. Cooper’s office said in a statement Monday that “state health officials are working with the RNC and will review its plans as they make decisions about how to hold the convention in Charlotte. North Carolina is relying on data and science to protect our state’s public health and safety.” A spokeswoman for the DNC event said earlier this month the convention would follow health officials’ “guidance to determine how many people can safely gather in Milwaukee this August.” Trump won North Carolina by 3.7% in 2016. Biden’s campaign thinks the state is one of many that went for Trump that are up for grabs this year.
China will strengthen its economic policy and continue efforts to lower interest rates on loans, central bank Governor Yi Gang said, reinforcing expectations of further support measures to revive an economy ravaged by the coronavirus pandemic. Yi, in an interview published by the central bank on Tuesday, said China’s economic fundamentals are unchanged despite many uncertainties and reiterated that its current stance on monetary policy will be more flexible. The People’s Bank of China will use various monetary policy tools to maintain sufficient liquidity, and keep the annual growth rate of M2 money supply and social financing significantly higher than last year, Yin said. Since the virus outbreak, the central bank’s policy measures, including bank reserve requirement cuts, relending, rediscount facilities, have amounted to 5.9 trillion yuan, Yi said. The central bank said on Monday that it had cut the reserve requirement ratio for big banks to 11%. China’s economy shrank 6.8% in the first quarter, the first quarterly contraction in decades, as the coronavirus took a heavy toll, and analysts say it could be months before broader activity returns to pre-crisis levels. The central bank will deepen reform of the loan prime rate, the benchmark lending rate, to help lower real lending rates, and will steadily unify benchmark deposit, lending rates and market interest rates.
Bank of Japan Governor Haruhiko Kuroda said on Tuesday the central bank may take more steps to cushion the economic impact from the coronavirus pandemic, maintaining his gloomy outlook even as a state of emergency was lifted in the capital Tokyo. His remarks come days after the BOJ unveiled its own version of the U.S. Federal Reserve’s “Main Street” lending programme to channel funds to small businesses hit by the virus. Kuroda, however, said it would be difficult for the BOJ to directly take on any losses financial institutions incur from loans that go sour as a result of the fallout from the pandemic. “The BOJ can further expand lending schemes, cut interest rates and ramp up purchases of exchange-traded funds. It can even come up with something new if necessary,” he said. Kuroda said Japan’s economy and price growth would remain weak for the time being, sticking to his pessimistic view even as the government lifted a state of emergency for Tokyo and four remaining areas on Monday. Prime Minister Shinzo Abe lifted a state of emergency after the number of infections fell across the country. The move meant social distancing curbs would be loosened nationwide. But many analysts expect the world’s third-largest economy to suffer the fallout from the pandemic for years to come, keeping inflation distant from the BOJ’s elusive 2% target. Data on Tuesday showed Japan’s services producer prices - or the price companies charge each other for services - fell 0.8% in April from a year earlier when excluding the effect of the sales tax, marking the biggest drop since 2011. Under a policy dubbed yield curve control, the BOJ guides short-term interest rate at -0.1% and the 10-year bond yield around 0%. It also buys huge amounts of government bonds and risky assets to pump money into the economy.
India’s economy is likely to have expanded at its slowest pace in at least eight years in the January-March quarter, partly as a result of the coronavirus clampdown, a Reuters poll predicted. Asia’s third-largest economy began slowing last year, but a countrywide lockdown implemented by Prime Minister Narendra Modi on March 25 halted economic activity completely. The poll of 52 economists, taken May 20-25, indicated India’s economy grew at 2.1% in the March quarter from a year ago, its weakest since comparable records began in early 2012, and sharply slower than 4.7% in the prior three months. Forecasts for gross domestic product data, due to be released on May 29 at 1200 GMT, ranged between +4.5% and -1.5%, underscoring the widespread uncertainty on the impact of the coronavirus on the economy at that stage. “A prolonged period of restrictions, along with limited financial support means that India’s economy will contract this year for the first time in over four decades,” Shah added. The extension of India’s lockdown until the end of May all but guarantees an unprecedented economic recession.
Gold ticked higher on Tuesday as brewing Sino-U.S. tensions over Hong Kong lifted demand for the safe-haven metal, though easing coronavirus-induced lockdown restrictions supported equities and capped bullion’s gains. Spot gold rose 0.2% to $1,732.38 per ounce by 0241 GMT. U.S. gold futures were down 0.1% to $1,733.50. “The key supportive factor for the (gold) market is rising tensions between China and the U.S.; and if we see a further escalation, we would see another move higher in gold,” said ING analyst Warren Patterson. Gold is seen as a safe-haven asset during political and economic uncertainties. Asian shares gained ground on expectations of an economic recovery and as investors focussed on more stimulus in China. Market participants are now awaiting the U.S. consumer confidence data due at 1400 GMT for more clues about the health of the world’s top economy. Among other precious metals, palladium gained 1.1% to $2,013.98 per ounce, platinum added 1.3% at $849.32, and silver rose 0.8% to $17.34.
Oil prices climbed on Tuesday, boosted by increasing faith in the market that producers will to stick to commitments to cut crude supply while demand picks up with more cars back on the road as coronavirus lockdowns are eased around the world. U.S. West Texas Intermediate crude futures gained 3.2%, or $1.06, to $34.31 a barrel as of 0429 GMT, just off an intra-day high of $34.33. Brent crude futures were up nearly 1.7%, or 59 cents to $36.12, adding to a 1.1% gain on Monday in thin holiday trading. The market was buoyed by comments from Russia reporting its oil output had nearly dropped to its target of 8.5 million barrels per day for May and June under its supply cut deal with the Organization of the Petroleum Exporting Countries and other leading producers, a grouping known as OPEC+. OPEC+ countries are set to meet again in early June to discuss maintaining their supply cuts to shore up prices, which are still down around 45% since the start of the year. The big producers agreed in April to cut output by nearly 10 million bpd for May and June. Meanwhile data from energy services firm Baker Hughes showed the United States’ rig count hitting a record low of 318 in the week to May 22, also indicating lower output in the future.