Markets are striking a more optimistic tone at the beginning of the week. Some governments are targeting Easter as a time to begin rolling back lockdown restrictions. Investors are taking it as an early sign that we’re coming out the other side of the economic standstill.

Oil prices remain volatile in the run up to a possible supply deal. Crude oil futures tanked over 10% in early trading before rebounding to losses in the low single digits. The loud noises from Saudi Arabia and Russia suggest a lot of bad blood over recent events. But noises are better than silence and it looks like production will end up being cut significantly. The meeting scheduled for Monday has been delayed but for what it’s worth Russia’s Dmitriev said a deal is “very, very close.”

European stock markets have opened higher on signs that infection rates could be peaking and that stay home orders could be rescinded by Easter. But although the overall tone feels better, every day sees more evidence of the toll the economic shutdown is having on individual companies.

The mass grounding of aeroplanes because of the coronavirus has forced Rolls Royce to drops both its divi and yearly targets. RR shares are down over 60% in the last month, comparing very unfavourably to the FTSE 100 that is down 20%. Cutting dividends will continue to be a necessary tool for companies to keep extra cash buffers during the downturn. The hunt for yield is about to get a lot tougher.

Shares on Wall Street look set for a strong open on Monday. That opening gains will recoup last week’s losses is probably more a sign of volatility than a significant positive shift in markets.

There are some shifts in the virus numbers that look promising. South Korea 47 reported new cases, its lowest in six weeks. In France, the number of people who need intensive care has been falling and in the US, VP Pence sees “glimmers of progress” with New York state seeing its first daily drop in number of cases.

News that Prime Minister Boris Johnson was admitted to hospital saw the British pound dip, only to recover quickly since it seems it was just precautionary. After declines on Friday, GBPUSD seems to have put in a base at 1.22 and GBPEUR at 1.13. Risks to UK sentiment could re-emerge if Boris’s hospital stay extends for a few days leaving a leadership vacuum behind. 

 

Opening calls

SP 500 to open 103 points higher at 2,591

Dow Jones to open 865 points higher at 21,917

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