MACRO & OIL NEWS
So government measures fail to calm the market and oil weakens further…
Fear grips markets as faith in intervention runs out (Financial Times, Katie Martin, Chris Giles and Alex Barker) shows that markets failed to take comfort from more government intervention in the coronavirus pandemic. Sterling took a massive hit versus the dollar (5% at one stage) and government bonds were sold off buy funds trying to stay alive and individuals liquidating any assets they could to raise cash.
Meanwhile, Oversupply could force oil prices to go negative (The Times, Ben Martin and Emily Gosden) highlights oil prices falling by over 11% as Saudi Arabia
reiterated its commitment yesterday to ramping up production. One analyst, Paul Sankey at Mizuho Securities, mooted the possibility of oil prices going “negative”if oil storage facilities run out and that the cost of storing the extra oil is higher than paying customers to take it. * SO WHAT? * It seems to me that this is a calculated gamble by the Saudis – and maybe they are using the coronavirus as an opportunity to “finish off” their US shale competition quickly whilst ensuring that they will be the first to benefit when oil demand starts picking up again from China, the world’s biggest oil importer. News reports this morning say that there are no new cases in China today and Wuhan residents are being allowed outside after six weeks of confinement – suggesting that there might be light at the end of the tunnel.
We look at the latest developments as well as some of the “winners”…
Second wave of coronavirus cases hits Asia (Financial Times, Edward White, Kathrin Hille, Sun Yu, Stefania Palma, Alice Woodhouse and Primrose Riordan) sounds a warning against any complacency about the virus as officials in South Korea, Taiwan and some parts of China and South-east Asia are implementing new tighter measures after weeks of declines. The number of “imported” infections has gone up as people try to escape the outbreak in Europe and so many countries are now putting travellers into quarantine for 14 days no matter what their condition or travel history – and many will have to pay for food and accommodation themselves.
On a more positive note, Flu drug Avigan speeds up coronavirus recovery in early trials (Financial Times, Kana Inagaki) heralds some rare good news on the virus as Japan’s Fujifilm Holdings’ anti-flu drug Avigan (its generic name is favipiravir) has made progress in clinical trials in China. The company’s share price shot up by 15% on the news but it is early stages and doctors say that side effects can cause foetal abnormalities in pregnant women. Still, it sounds like a move in the right direction. UK to increase coronavirus testing to 25,000 a day (Financial Times, Camilla Hodgson) highlights BoJo’s plan to significantly increase the amount of testing in the UK within a month, versus 10,000 a day over the next week. NHS staff are being prioritised.
Industries continue to react to the outbreak as per Some UK property funds ban withdrawals over coronavirus (The Guardian, Hilary Osborne) which says that funds run by Standard Life Investments, Aberdeen, Aviva Investors, Legal & General and BDO were suspended yesterday after Kames Capital and Janus Henderson (the latter of which is the UK’s biggest property fund) did so on Tuesday. Funds shut down withdrawals because they can’t sell assets fast enough to return the cash and I think once that Kames and Janus Henderson did it on Tuesday, it was only a matter of time before everyone else started to shut the door. Meanwhile, Detroit car makers to temporarily close US plants over virus concerns (Wall Street Journal, Ben Foldy and Nora Naughton) highlights a temporary shutdown for factories in the US, Mexico and Canada as execs from General Motors, Ford and Fiat Chrysler Automobiles made a joint decision yesterday following discussions with union leaders.
On the other hand, there are companies that are seeing a major uptick in demand. Netflix urged to ease load on the internet as demand soars (Daily Telegraph, Margi Murphy) shows that EU commissioner for the internal market and digital economy, Thierry Breton, has asked Netflix’s chief exec Reed Hastings to consider streaming films in lower quality to relieve pressure on the internet! They talked about using a switch that could swap between streaming quality at peak hours as demand for streaming is continuing to soar.
Gym bunnies missing out on their fix are switching to alternative means of exercise in Fitness catches the streaming bug as coronavirus forces gyms to close (Financial Times, Eric Platt and Andrew Edgecliffe-Johnson) which says that chains like Barry’s Bootcamp, SoulCycle, Flywheel and high-end operator Equinox are all suffering due to tightening social distancing measures. Peloton is seeing its share price rise as investors bet that it will do a roaring trade in bikes and online memberships (it’s now offering 90-day free trials) but if you want to do indoor cycling for a lower cost you might want to have a look at Log on and join the pros in the peloton (Daily Telegraph, John MacLeary) which looks at the growing world of indoor cycling and how Zwift is benefiting. Basically, this isn’t a spin class – it’s virtual racing where you can ride alongside your friends and now, potentially world class cyclists as real world events continue to get cancelled. How Zoom parties are helping to break the self-isolation gloom (Daily Telegraph, Margi Murphy) suggests another platform that is benefiting from social distancing as all sorts of events are being held online via Zoom.
Another area that is already seeing a huge spike in demand is identified in Coronavirus proves a bonanza for Asian edtech start-ups (Financial Times, Mercedes Ruehl, Andrew Jack and Primrose Riordan) where demand is so big that one Chinese online education provider, Yuanfudao, was out of action for two hours after 5m people took up the offer of free live courses! Indian start-up Byju’s saw a 60% hike in students using its products since it offered school children free access to its app earlier this month and shares in GSX, a Chinese online education provider, have shot up by 92% since the start of this year. Other companies such as Snapask and Ai English have also seen a major rise in student numbers. I suspect the frenzy will continue!
INDIVIDUAL COMPANY NEWS
Apple announces updates…
Apple updates iPad, MacBook Air with new keyboard (Wall Street Journal, Sarah E. Needleman and Tripp Mickle) highlights new Apple updates which investors normally lap up – but probably won’t this time as they are distracted by coronavirus news. It announced a new keyboard for the MacBook Air, replacing the problematic “butterfly” keyboard and an updated iPad Pro with a better camera, sound,
motion sensors and scanner. * SO WHAT? * I suspect that this news will pretty much go under the radar considering all the other things that are going on at the moment, but I think that the biggest announcement Apple could make in terms of new products is a new iPhone with 5G capability! I just wonder whether we will have to wait longer for such a launch to let production get back to normal. Also I think that people may need to feel a bit more stable with their finances before shelling out on something that will undoubtedly be incredibly expensive!
And finally, in other news…
As many of you already know, I am half-Japanese. Over in Japan, there is a custom called “hanami” where people like to go and look at cherry blossoms – it’s such a “thing” that the weather section of the news gives you cherry blossom forecasts so that you know when the blossoming is going to happen in your area! As well as lots of individuals going to see the blossoms, everyone goes in groups to have cherry blossom parties where they sit with their colleagues under the cherry trees and drink beer. Great, right? But unfortunately, social distancing measures are now in force in Japan due to the coronavirus – so a Japanese website has published a whole load of 360° videos so you can see the blossoms from the comfort of your own screen! Have a look at VR cherry blossom parties: 360-degree video series provides beauty, dates for those stuck indoors (SoraNews24, Casaey Baseel https://tinyurl.com/sktfhgy). There is even a video where you can see the blossoms on a virtual date with your Japanese “girlfriend”! Spooky…
Some of today’s market, commodity & currency moves (as at 0727hrs green is up, red is down). THIS IS INTENDED AS A ROUGH GUIDE ONLY!
|FTSE 100 *
|Dow Jones *
|S&P 500 *
|Oil (WTI) p/b
|Oil (Brent) p/b
|Gold Per t/oz
(markets with an * are at yesterday’s close, ** are at today’s close)