Europe will need €500 billion to fight against coronavirus effects Eurozone finance ministers held a videoconference, during which they expected to agree on the main issues of the plan to restore the economies of the region in the amount of €500 billion. The meeting and discussions lasted 16 hours, negotiations will continue tomorrow, April 9. Eurogroup Chairman Mario Centenu noted that the negotiations have come to their logical conclusion, but an agreement on a number of issues has not yet been reached. In particular, disagreements between Italy and the Netherlands on the conditions under which loans should be provided to eurozone countries to combat the pandemic prevented progress in the negotiations. The plan for supporting and restoring the economies of European countries will become the largest in the history of the European Union and its implementation will allow us to overcome the global crisis without losses. The recovery program involves financing schemes to protect jobs (€ 100 billion), the European Investment Bank's business support program (€ 200 billion), and a program to support the most vulnerable states (up to € 240 billion).
09.04. The number of applications for unemployment benefits in the United States sets records According to the US Department of Labor, in the first week of April, the number of initial applications for unemployment benefits fell by 261 thousand from the previous week's revised figure of 6.867 million and amounted to 6.606 million. In just the last three weeks, applications for this social payment came from 16.7 million people. From March 2019 to March 2020, the total number of applications filed was only 11.5 million. Analysts had expected a decrease in the number of applications of 1.398 million from the previous week's previous level of 6.648 million.
10.04. EU agrees €500 billion rescue package The finance ministers of the European Union (EU) have agreed on a plan to save the bloc’s economy in the context of the coronavirus pandemic and economic crisis worth more than 500 billion euros. In particular, within the framework of the European Stabilization Mechanism (ESM), about 240 billion euros will be allocated to those states that have suffered the most from the coronavirus pandemic and which are members of the euro area. 200 million euros will go to lending to European enterprises with an emphasis on small and medium-sized businesses, and about 100 billion euros will go to a wage subsidy scheme so that companies do not cut their employees. After the decision of the finance ministers, this plan should be approved at a meeting of the European Council, the highest political body of the EU.
13.04. Saudi Arabia continues the price war Saudi Arabia again went against its colleagues under the OPEC+ agreement and seems to have decided to continue the price war. Despite a deal concluded over the weekend to further reduce oil production, the Kingdom announced today that it is increasing discounts on its oil. For example, the cost of a barrel of Arab Super Light in the Asian market is lower by $5.5 than in other regions. For Northern Europe, discounts will remain the same, but the southern countries of the Old World will be able to count on an increase in discount. Compared to the Brent price, the Saudi Arab Extra Light will cost $10.3 less. Thus, despite OPEC's efforts to stabilize the oil market, the historic deal to reduce production remains so far only in theory. To see a more or less fair value, it is necessary to wait until quarantine measures are lifted in many countries.
14.04. China's GDP growth in 2020 may slow to a 44-year low According to analysts, China's economic growth may slow to a minimum in almost half a century due to the crisis in many areas caused by the coronavirus epidemic. In particular, the world's second largest economy can grow by only 2.5%, at the lowest rate since 1976. For example, last year, China's GDP increased by 6.1%. Despite the fact that the Chinese government has begun to gradually ease restrictive quarantine measures, economic recovery is not expected in the coming months. Experts predict the loss of nearly 30 million jobs amid falling global demand. In addition to the measures already taken, the People's Bank of China intends to reduce the required reserve ratio (RRR) for banks by another 100 basis points, as well as reduce the annual loan rate for first-class borrowers (loan prime rate, LPR) by 35 basis points to 3.70% by the end of 2020.
15.04. US suspended World Health Organization financing US President Donald Trump announced that the United States is completing funding for the World Health Organization (WHO). In his opinion, the organization was unable to cope with its duties and functions during the coronavirus pandemic. Moreover, Trump accused WHO of concealing data on the spread of the disease. The head of the White House also noted that the United States will look for alternative ways to work with other countries on health issues. Australian Prime Minister Scott Morrison has supported Donald Trump's criticism of the World Health Organization, but saying that Australia will continue to make contributions. According to Morrison, WHO did not pay due attention to the problem of the virus during its first appearance in China and did not take appropriate measures. Donald Trump also accused the organization of opposing the US decision to close the border with China. Many countries criticized the decision of the American president.
16.04. Another 5.2 million Americans file for unemployment According to the US Department of Labor, the number of American citizens applying for unemployment benefits for the first time for the week ending April 11 was 5.245 million. The Ministry notes that Americans continue to massively apply for unemployment benefits for the fourth consecutive week. The previous value was fixed at 6.615 million. Analysts had expected a decrease in the number of applications to 5.1 million. Over the past month, more than 20 million applications have been filed amid the tough measures to combat the spread of coronavirus. The number of people continuing to receive unemployment benefits for the week ending April 4 increased by 4.53 million to a record 12 million. Last month, the US economy lost 701 thousand jobs. As a result, in March unemployment jumped from 3.5% to 4.4%, peaking since August 2017. According to forecasts by Morgan Stanley, US unemployment will only continue to grow in the II quarter and will reach a record level of 15.7%.
20.04. China lowered key rate for the second time since the beginning of the year Today China for the second time since the beginning of the year lowered lending rates to support the economy and the population affected by the coronavirus. The annual loan rate for first-class borrowers (LPR) has been reduced from 4.05% to 3.85%. The five-year rate affecting the cost of mortgages has been reduced from 4.75% to 4.65%. Earlier, on April 15, the Central Bank lowered the rate on loans issued under the Medium-term Lending Facility (MLF) mechanism from 3.15% to 2.95% to reduce the cost of borrowing for companies. This level has become minimal since the introduction of the liquidity instrument in September 2014. Also, under the MLF, the regulator provided loans for one year in the amount of 100 billion yuan ($14.19 billion). Recall that China's GDP in the I quarter of 2020 fell for the first time in 28 years – by 6.8% (to 20.65 trillion yuan).
21.04. Oil market collapses again The situation in the oil market has again become the focus of attention of traders. For the first time in history, the price of WTI crude oil fell below zero (- $40 per barrel). This means that oil sellers are ready to pay extra to the buyer in order to get rid of crude. Brent crude oil today collapsed to around $19 per barrel, updating multi-year lows. Pressure on quotes continues to be exerted by a catastrophic drop in demand due to the economic damage caused by the coronavirus epidemic, as well as an increase in supply. The collapse of prices continues, despite the recently concluded new OPEC+ deal, according to which the producing countries will reduce production by 9.7 million barrels per day. As practice has shown, these measures have proved futile in the face of an oversupply in the oil market. OPEC estimates that about 14.7 million barrels per day may be unclaimed in the second quarter of the year. As a result, sales in the oil market may continue in the near future.
22.04. UK March inflation slows to 1.5% According to the National Statistical Office (ONS) of Great Britain, consumer prices in March rose by 1.5% year on year compared with the February figure of 1.7%. Analysts had forecast inflation to fall to 1.5%. However, it is worth considering the fact that these statistics were collected even before the large-scale restriction of economic activity in the country, so they do not reflect the current situation. The slowdown in inflation last month was primarily due to a decrease in the price of automotive fuel (by 5.1%) and clothing (by 0.3%). Food prices rose 0.2% on a monthly basis and 1.3% on an annualized basis. Core inflation (excluding food, alcohol, tobacco and energy, CPI Core) rose 1.6% after rising 1.7% a month earlier.
