Connect with us


Surveys show coronavirus pandemic savaging global economy – Financial Post



HONG KONG — Evidence of the devastation wreaked on the global economy by the coronavirus pandemic mounted on Tuesday as activity surveys for March from Australia and Japan showed record falls, with surveys in Europe and the United States expected to be just as dire.

After an initial outbreak in China brought the world’s second largest economy to a virtual halt last month, an ever growing number of countries and territories have reported a spike in infections and deaths in March.

Entire regions have been placed on lockdown and in some places soldiers are patrolling the streets to keep consumers and workers indoors, halting services and production and breaking down global supply chains.

Mirroring the emptying of supermarket shelves around the world, indebted corporates have rushed into money markets to hoard dollars, with a global shortage of greenback funding threatening to cripple firms from airlines to retailers.

“The coronavirus outbreak represents a major external shock to the macro outlook, akin to a large-scale natural disaster,” analysts at BlackRock Investment Institute said in a note.

Purchasing Managers’ Index (PMI) surveys from Japan showed the services sector shrinking at its fastest pace on record this month and factory activity contracting at its quickest in a decade.

Services PMI slumped to a seasonally adjusted 32.7 from February’s 46.8 and manufacturing PMI fell to 44.8 from a final 47.8 last month. The 50 mark separates growth from contraction.

The survey results were consistent with a 4% contraction in the economy in 2020, Capital Economics senior economist Marcel Theliant said. The likely postponement of the Tokyo Olympics is expected to deal a heavy blow to the world’s third largest economy.

In Australia, the CBA Services PMI fell to a record low of 39.8 as restaurants, cafes and tourism were hit hard by travel bans and cancellations of events and concerts.

A separate analysis of card spending data by Commonwealth Bank of Australia showed shopping outside of grocery, alcohol and healthcare was bleak. A weekly consumer confidence gauge by ANZ-Roy Morgan plunged to 30-year lows at 72.2 points.

Later on Tuesday, the euro zone composite PMI is expected to come in at 38.8, the lowest since early 2009. U.S. manufacturing and services PMIs are also expected at multi-year lows of 42.8 and 42.0, respectively.


With most asset markets tanking, global central banks have been rolling out extraordinary measures on an almost daily basis to stop the rot.

In its latest drastic step, the Federal Reserve on Monday promised bottomless dollar funding.

For the first time, the Fed will back purchases of corporate bonds, backstop direct loans to companies and “soon” will roll out a program to get credit to small and medium-sized business. It will also expand its asset purchases by “as much as needed.”

The Fed last week slashed borrowing costs to zero and took other emergency steps to keep the commercial paper, Treasury and foreign dollar funding markets functional.

Still, some analysts say infinite monetary policy easing may not be enough and fiscal steps are crucial. The latest U.S. effort on that front remains stalled in the Senate as Democrats said it contained too little money for hospitals and not enough limits on funds for big business.

Finance and monetary leaders from the world’s 20 largest economies agreed on Monday to develop an “action plan” to respond to the pandemic that the IMF now expects to trigger a global recession, but offered no specifics.

“For the U.S. economy to be able to come out of the current crisis and the ongoing recession relatively unscathed, more radical policy interventions will be needed in the next few weeks,” Anna Stupnytska, global head of macro and investment strategy at Fidelity International said.

Speculation is mounting that data due on Thursday will show U.S. jobless claims rose an eye-watering 1 million last week, with forecasts ranging as high as 4 million.

Goldman Sachs warned the U.S. economy could contract by an annual rate of 24% in the second quarter, two-and-a-half times greater than the previous biggest contraction in the period after World War Two.


Asia is also easing monetary conditions across the board, with the Thai central bank expected to join regional peers in cutting rates on Wednesday.

With the Bank of Japan running out of ammunition, the pressure is on the government, which is looking into offering cash payouts to households as part of a package that could be worth more than $276 billion.

The Reserve Bank of Australia has flooded the system with nearly A$65 billion since March 12. It has also purchased A$9 billion in government bonds since launching its “unlimited” quantitative easing program on March 20.

The Australian government also announced a stimulus package of A$66.1 billion on top of the A$17.6 billion flagged earlier this month.

New Zealand said on Tuesday that retail banks will offer a six-month principal and interest payment holiday for mortgage holders and small business customers whose incomes have been affected by the economic disruption from COVID-19.

“Despite aggressive moves by central banks, investors remain unconvinced that any of these actions will be enough to stave off the ill effects from (the virus),” ING Asia economist Prakash Sakpal said. (Editing by Simon Cameron-Moore)

Let’s block ads! (Why?)

Source link


Global Oil Producers Agree On Joint 10 Million Bpd Output Cut –



Global Oil Producers Agree On Joint 10 Million Bpd Output Cut |

Julianne Geiger

Julianne Geiger is a veteran editor, writer and researcher for, and a member of the Creative Professionals Networking Group.

More Info

Trending Discussions

    Premium Content

    OPEC flag

    OPEC has succeeded. On Thursday, the OPEC++ group agreed, in principle, to cut 10 million bpd in oil production, according to media. But will it be enough? Today’s oil prices suggest not.

    As oil inventories burst at the seams and threaten oil prices the world over, the oil markets have been riveted by the Organization of Petroleum Exporting Countries’ (OPEC) actions as it relates to potential production cuts. While many analysts doubted that the group, and various other states who agreed to sit down with OPEC to hash out a new market stabilization plan, would cut as much production as would be necessary to draw down inventories, the group’s actions have never been more crucial to the survival of the entire oil industry.

    So critical, in fact, that the industry is even seeing die-hard free-market cheerleaders rooting for a deal from the oil cartel.

    The global oil market first had OPEC, which tasked itself with balancing the market and controlling prices by manipulating supply. When OPEC’s influence waned as U.S. shale became a bigger and bigger oil-market adversary, OPEC added a few non-OPEC members, including Russia, to form OPEC+. With even more market clout stripped away from the group by the colossal demand destruction thanks to the coronavirus, OPEC has enlisted the help of even more oil-producing countries. This group has been referred to as OPEC++.

    The Terms of the Deal

    The group was thought by some to be discussing a 10 million bpd cut across its members. Other sources suggested the figure was 15 million bpd. Still other sources, as talks were taking place on Thursday morning, said the group was discussing a 20 million bpd cut.

    With global oil demand thought to have taken as much as a 30 million bpd hit, some thought even more barrels would be cut.

    In the end, the OPEC++ group agreed to cut just 10 million bpd. While still a massive production cut the likes of which the world has never seen, it is significantly under what the market will likely require in order to “balance”—and oil prices know it.

    Premium: What Will $15 Oil Mean For Producers?

    As part of the deal, all the specifics of which have not yet been released, Russia has reportedly agreed to 2 million bpd of cuts. Saudi Arabia, meanwhile, has agreed to shave 4 million bpd off its record-setting April production levels of 12.3 million bpd – for a cap of 8.3 million bpd. 

    The rest of the members have not yet worked out who will cut what.

    There will be additional G20 discussions about the production cuts on Friday.

    The hiccup in the deal had been the rivalry between Saudi Arabia and Russia, and whether the United States would succumb to the international pressures mounted against it to join in the cuts. US President Donald Trump, however, has repeatedly said that the market would naturally force US production down, effectively “cutting” along with OPEC as a matter of course. This issue, too, is expected to come up at Friday’s meeting.


    OPEC + has had a pretty good track record overall when it comes to complying with its production quotas. Prior to the end of the previous production cut deal than expired on April 1, the extended OPEC group reached 112% compliance. Still, many individual OPEC member countries have had a difficult time staying in compliance with production cut quotas throughout the last few years, with some flagged as chronic overproducers. Also, that 112% compliance figure is skewed, with OPEC over complying and the “+” part of the OPEC+ group under complying. In January this year, OPEC’s allies in the production cuts achieved only 55% of their targeted cuts. Meanwhile, OPEC achieved 136% of its promised cuts.

    The figures suggest that OPEC was more motivated to take action to stabilize the market than its OPEC+ counterparts.

    While Saudi Arabia has a great track record for keeping within its quota – or even substantially below it – Russia and Iraq, for example, were chronic overproducers. This has led to much skepticism that the new group, comprised of more than just the traditional members, will be able to stay within the agreed-upon levels.

    To ensure compliance, a draft communique sent to G20 member countries – circulated prior to the Thursday OPEC++ meeting – told members that it would create a special group to monitor this compliance. The group would not only monitor the compliance to the Thursday agreements, but it would also report back to the G20 energy ministers “for further corrective actions if needed,” according to Bloomberg, who saw the draft.

    The draft document didn’t specifically mention “production cuts”. Rather, the document indicated that it would monitor whatever steps the Thursday group agreed on that would stabilize the oil markets.

    With 10 million bpd in the bag, the market will now look to the G-20 meeting to see how the United States will respond to the agreement that OPEC has hashed. In the meantime, oil prices have responded with a lukewarm reception.

    By Julianne Geiger for

    More Top Reads From

    Download The Free Oilprice App Today

    Back to homepage


    Trending Discussions


      Related posts

      Let’s block ads! (Why?)

      Source link

      Continue Reading


      Calgary’s unemployment rate is highest in Canada as Alberta’s jobless rate spikes – Global News



      Calgary’s unemployment rate is now the highest in the country as residents deal with the fallout of the COVID-19 pandemic.

      New numbers released by Statistics Canada on Thursday show the jobless rate in the southern Alberta city sat at 8.6 per cent in March, a sharp increase from 7.4 per cent February and the worst among the 33 metropolitan areas surveyed.

      READ MORE:
      Coronavirus: Canada lost 1 million jobs in March

      In Edmonton, the unemployment rate increased ever-so-slightly in March to 7.9 per cent compared with 7.8 per cent the month before.

      According to Statistics Canada, unemployment rose in all provinces, with Alberta seeing unemployment spike to 8.7 per cent in March, up from 7.2 per cent the month before.

      [ Sign up for our Health IQ newsletter for the latest coronavirus updates ]

      Alberta’s jobless rate is one of the highest in Canada. Only New Brunswick (8.8 per cent), Nova Scotia (9.0 per cent), and Newfoundland and Labrador (11.7 per cent) have higher provincial numbers.

      Story continues below advertisement

      Some Calgary businesses hiring during economic slowdown

      Some Calgary businesses hiring during economic slowdown

      Nationally, the unemployment rate jumped to 7.8 per cent from 5.6 per cent in February, the largest one-month increase since comparable record-keeping began in 1976. The previous record was the 125,000 jobs lost in January 2009.

      Canada’s March labour market report was the first since the country started feeling a significant impact from the coronavirus pandemic.

      READ MORE:
      1 month after Alberta’s first COVID-19 case, what’s changed?

      Alberta’s first case of COVID-19, a woman in her 50s from the Calgary area, was announced on March 5.

      Two weeks later, on March 19, Alberta’s chief medical officer of health Dr. Deena Hinshaw announced the province had recorded its first COVID-19 death.

      READ MORE:
      Alberta Health Services, grocery stores, delivery companies among those looking to hire

      In the month since the province’s first COVID-19 case was announced, schools across the province have been closed, communities have declared local states of emergency and non-essential businesses have been ordered to shut down.

      © 2020 Global News, a division of Corus Entertainment Inc.

      Let’s block ads! (Why?)

      Source link

      Continue Reading


      WestJet rehiring 6,400 workers amid steep decline in air travel – CTV News



      TORONTO —
      WestJet is following Air Canada’s lead and hiring back thousands of laid-off workers now that the government has agreed to pay the majority of their wages.

      In a video posted to social media late Wednesday night, WestJet president and CEO said nearly 6,400 employees will be brought back onto the company’s payroll – although most of them will not be asked to perform any operational duties.

      “There will simply not be enough work there for them, but it will help them make ends meet,” Sims said in the video.

      WestJet announced on March 24 that it would be laying off 6,900 workers, or almost half of its total staff.

      Sims said the about-face is a result of the federal government’s emergency wage subsidy, which allows businesses to keep workers on the payroll with the government paying 75 per cent of their salaries. The government recently loosened its rules around which businesses are eligible for this program, expanding it to any that can show a 15-per-cent decline in revenues during March.

      The 6,400 workers will be rehired once the changes to the wage subsidy program are passed by Parliament, Sims said.

      WestJet’s announcement came hours after rival Air Canada said it plans to rehire all 16,500 workers it laid off in late March because it can now access the same program.

      Acknowledging a “downturn” in business due to the decline in air travel amid the COVID-19 pandemic, Sims said WestJet service will continue to be reduced but vowed that the airline would not abandon any of the 38 airports it currently serves.

      “We will not be grounding this airline unless specifically instructed to by the governments,” he said.


      Let’s block ads! (Why?)

      Source link

      Continue Reading