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Top 5 Things to Know in the Market on Tuesday, April 14th

Published 04/14/2020, 06:10 AM
Updated 04/14/2020, 06:19 AM
© Reuters.

By Geoffrey Smith -- President Donald Trump ramps up the pressure on governors to reopen their economies, while Spain and Italy take the first tiny steps to reopening theirs amid signs that the Covid-19 pandemic has peaked there. France and India extend their lockdowns until May, and Germany and the U.K. are expected to follow later in the week. Oil prices fall, unconvinced by the OPEC+ deal at the weekend to cut supply, and JPMorgan (NYSE:JPM) and Johnson & Johnson will kick off what's likely to be a rollercoaster Q1 earnings season. Here's what you need to know in financial markets on Tuesday, April 14th. 

1. Europe's big 3 set to extend lockdowns as Spain, Italy start reopening

The European countries worst hit by the Covid-19 outbreak, Italy and Spain, started to lift their restrictions on non-essential business amid signs that the virus has peaked there. Both economies, however, remain largely closed.

Europe’s three biggest economies, however, are set to remain in near total lockdown for at least a couple more weeks, however. France extended its quarantine order through May 11 on Monday, and German Chancellor Angela Merkel is expected to do likewise after a teleconference with state governors on Wednesday. The U.K., meanwhile, is preparing to extend its lockdown for another three weeks on Thursday, according to The Times of London.

Prime Minister Narendra Modi also extended India’s lockdown for another two weeks, until May 3, while Russia posted its biggest daily rise in new cases and deaths to date.

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2. Trump raises pressures on governors to restart economies

President Donald Trump urged U.S. state governors to speed up their preparations to reopen their economies, giving a veiled warning that he would try to overrule them if they didn’t.

Trump told his daily news briefing that he had “total authority” as regards economic management of the pandemic, but failed to give an answer when challenged that the Constitution grants the presidency no such power explicitly – and that all powers not conferred on the federal government remain with the states.

Two groups of states, on both the east and west coasts of the U.S., have said they will work on coordinating the lifting of lockdown measures.

3. Stocks set to open higher; dollar falls, gold rises

U.S. stocks are set to open higher, reversing the losses they made in relatively thin trade on Monday while European markets were closed.

By 6:15 AM ET (1015 GMT), the Dow Jones 30 Futures contract was up 297 points, or 1.3%, while the S&P 500 Futures contract was up 1.1% and the Nasdaq 100 futures contract was up 1.4%.

European markets reopened higher after the Easter holiday but pared gains to trade mixed by midday in Europe. Chinese and Japanese markets rose broadly, helped by data showing that Chinese exports and imports fell by less than expected in March.

Elsewhere, the dollar index edged down below 100 as markets continued to digest the Fed's pre-Easter stimulus package. That's also supporting gold futures, which are on course for their highest close in nearly eight years.

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4. Get ready for a wild Q1 earnings season

JPMorgan and pharma giant Johnson & Johnson (NYSE:JNJ) kick off what could be the weirdest earnings season ever, reflecting the challenges of portraying the state of a business in the middle of the pandemic.

Both companies’ earnings will be largely historical, given that the virus didn’t start to affect the U.S. economy until March, so all eyes will be on their assessment of more short-term developments.

JPMorgan in particular will be scrutinized for how much it sets aside in provisions against loans that have either gone bad already or that are expected to go bad in the coming months. That number will also, inevitably, be a judgment on the efficacy of government and monetary measures to support the economy.

5. Oil prices fall amid doubts over effectiveness of supply cuts

Crude oil prices faltered as the deal cobbled together over the Easter weekend to cut global supply paled in comparison to ongoing reports showing the extent of demand destruction.

OPEC and its allies agreed to cut some 9.7 million barrels a day of output for the next two months, but the methods used to calculate the cut suggested that actual reductions in day-to-day output from current levels would be smaller.

By 6:10 AM ET, U.S. crude futures were down 2.4% at $21.85 a barrel, while the international benchmark Brent was down 1.2% at $31.36. The differential between the two blends, at nearly $10 a barrel, has rarely been wider.

Additionally, noted Saxo Bank strategist Ole Hansen, dated Brent (for immediate delivery) is trading $5.15 below the June futures contract.  “The OPEC++ deal has done little to alleviate the stress in the market. Also shows that it is oil with its weak demand outlook, not FED pumped stocks, that gives the correct take on the current global economy,” Hansen said.

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Latest comments

It's lunacy to think that the markets are up today, the fed can keep dishing out trillions to prop the economy but it will only last so long..
It will be 18 months before we see anything close to normal unless some miracle cure falls out of the sky for this cold virus.  I think the FED governor telegraphed that factoid yesterday.  With forward P/E in the normal recession range of 12 and E expected to be $140 the S&P should be trading around 1860 right now.  Sad but true no matter how many transport planes full of funny money old Jet Age Jerome dumps on us.
I don't think reality has reared its head least to wall st.
 Don't worry Jay I'll just take profits into their rally and wait for the next leg they are making slower and deeper.  Oil is telling the real story.  Maybe the FED can buy 20m barrels a day of that stuff and pump it too. (pun intended)
oil and gold telling us completely different story than fed and co. trying to serve us
trump will be stop by medicals experts and local governments. oil will keep oversupply and price will keep going lower. JP Morgan will have terrible earnings reports as a large part of revenue were made by trading, more over the 0 interest rate will prevent it to create substantial incomes from new loans
Q2 will be worse for most companies. In Q1 will be observed the effects from March. For that reason, there will be a considerable gap between Q1 and Q2.
JP Morgan has released their Q1 results, pre market is in green, manipulated stock market...
Well, I guess FED will buy all the over supply of the oil to manipulate the oil price if it can manipulate the US stock market
The purpose of the lockdown was to control and slow down the virus spreading. It would be totally controversial to lift the lockdown as the confirmed cases are skyrocketing. What to expect after they lift lockdown? Then, what was all that for? For the people's lives or for the political approval? Were they really suppose to impose lockdown at first place after all? The president talking about reopening economy "very quickly" as the number of cases multiplies... totally controversial. If they "reopen" the economy that quick, the lockdown ends up making no sense, given it's damage caused and measures taken for stimulus worth trillions.
They did it to print more money lol. Didn't care about healthcare from the start
just wanted to be the first comment
“The OPEC++ deal has done little to alleviate the stress in the market. Also shows that it is oil with its weak demand outlook, not FED pumped stocks, that gives the correct take on the current global economy,” Exactly...
I understand why Trump wants to reopen the economy. However, the pandemic spread will make the current situation look like a walk in the park
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