Gold bars to be exempt from tariffs, White House clarifies
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
By Ritvik Carvalho
LONDON, April 3 (Reuters) - European stock markets sank on
Friday, erasing meagre gains for the week, as more companies
flagged a hit to business from the coronavirus pandemic while
oil prices extended their previous day's gains on hopes of a
global supply cut.
With virus-fighting lockdowns raising the risk of a
prolonged global downturn, investors continued to seek the
safety of the U.S. dollar and government bonds, pushing U.S.
Treasury yields near their lowest in three weeks.
With over a million people infected worldwide, there were
more signs the pandemic would take a massive toll on economic
growth. Morgan Stanley said the U.S. economy will shrink 5.5% in
2020, the steepest drop since 1946, with a huge 38% contraction
predicted for the second quarter. The pan-European STOXX 600 index .STOXX was down 0.4% by
0749 GMT, taking MSCI'S All Country World Index .MIWD00000PUS
down 0.3%.
A number of firms flagged a hit to business from the
pandemic, foreshadowing a deeper earnings recession ahead of the
reporting season. .EU
MSCI's Asia-Pacific index outside Japan .MIAPJ0000PUS
dipped 0.6% while Japan's Nikkei .N225 erased earlier gains to
end flat.
U.S. stock futures sank nearly 1 percent. ESc1 .N
Brent crude futures LCOc1 gained 3.64% to $31.03,
extending Thursday's record 24.7% surge , while U.S. West Texas
Intermediate (WTI) crude CLc1 fell 0.83% to $25.11. O/R
Trump said on Thursday he had spoken to Saudi Crown Prince
Mohammed bin Salman, and expects Riyadh and Moscow to cut oil
output by as much as 10 million to 15 million barrels, as the
two countries signalled willingness to make a deal. Saudi Arabia said it would call an emergency meeting of the
Organization of the Petroleum Exporting Countries, state media
reported.
The amount cited by Trump would represent an unprecedented
cut equal to 10% to 15% of global supply, in output per day
terms, a common unit of measurement.
However, Trump provided few details, an omission some
analysts said was likely intentional, and which they said
explained a pullback in prices in the Asian session.
"The reason the price came back down is that these figures
are so unbelievable as to make one wonder whether the person
saying them understood what he was talking about," said Marshall
Gittler, head of investment research at BDSwiss Group.
In early March, talks over production cuts between the two
countries collapsed, leading them to start a price war that
pushed oil prices to the lowest levels in nearly two decades.
SAFE ASSETS IN DEMAND
Investors sought the safety of government bonds. Benchmark
U.S. 10-year notes US10YT=RR last yielded 0.597%, near a
three-week low of 0.563% touched on Thursday.
More evidence of the damage from widespread stay-at-home
orders to contain the spread of coronavirus emerged in the
United States, with an unprecedented number of workers - 6.6
million - filing jobless claims. Projections released by the U.S. Congressional Budget Office
showed gross domestic product would decline by more than 7% in
the second quarter as the health crisis takes hold. The pandemic has claimed more than 52,000 deaths as it
further exploded in the United States and the death toll climbed
in Spain and Italy, according to a Reuters tally. Highly rated U.S. corporate bond issuers raised a record
$110.502 billion this week, according to Refinitiv IFR data, as
firms borrowed cash in fear the coronavirus crisis may soon
limit their access to capital markets. In the currency market, the dollar maintained its firmness
against a basket of currencies as investors and companies
continued to hoard the world's most liquid currency.
The dollar index =USD has risen 1.97% so far this week,
even as extreme tightness for greenback since last month eased.
The euro dipped 0.5% to $1.0798 EUR= set for five straight
days of losses, and at its lowest level since March 25. The yen
also stepped back to 108.11 per dollar JPY= from Wednesday's
two-week high of 106.925.
Gold prices extended the previous day's gains on the dire
U.S. jobless claims figures, intensifying fears of the coming
economic slowdown and driving investors toward the safe-haven
metal.
Spot gold rose 0.1% to $1,613.78 per ounce XAU= after a
1.28% rise on Thursday.