Asia starts cautiously, American crude slips

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SYDNEY (Reuters) – Asian stock markets were cautious on Monday on expectations for a week loaded with corporate earnings reports and economic data that will reverse the damage caused by the global virus lockdown, while US crude prices have fled early.

FILE PHOTO: Passers-by wearing protective masks after a coronavirus epidemic (COVID-19) are reflected on a screen displaying stock prices outside a brokerage house in Tokyo, Japan, March 17, 2020. REUTERS / Issei Kato

Japan said exports fell nearly 12% in March from a year earlier, as shipments to the United States fell more than 16%. The world’s first manufacturing readings for April are expected on Thursday and are expected to show recession readings.

The largest MSCI Asia-Pacific equity index outside Japan .MIAPJ0000PUS fell 0.2% at the start of a slow session, with a necessary break after five consecutive weeks of gains. Japan Nikkei .N225 fell 1.3% and South Korea .KS11 0.1%.

The E-Mini futures for the S&P 500 ESc1 fell 0.7% after jumping last week on hopes that some US states would soon start reopening their economies.

US President Donald Trump said on Sunday that Republicans were “close” to reaching an agreement with the Democrats on a support plan for small businesses.

But the U.S. Centers for Disease Control and Prevention reported a 29,916 increase in new infections and said the number of deaths had increased from 1,759 to 37,202.

The S&P 500 .SPX rose another 30% from its March low, in part due to the extreme easing measures taken by the Federal Reserve. The Fed bought nearly $ 1.3 trillion in treasury bills alone, and billions of non-sovereign debt that it could never have reached in the past.

“The Fed will be a major buyer of risky assets in the coming months and has shown a willingness to support virtually any part of the struggling domestic financial system,” said Oliver Jones, senior market economist at Capital Economics.

However, the particular composition of the S&P 500 was also a major factor, he added, as three sectors relatively resistant to virus-induced locking – IT, communications services and healthcare – represent about 50% of the index.

Indeed, Microsoft, Apple, Amazon, Alphabet and Facebook account for more than a fifth of the index.

“In addition, the S&P 500 is aimed at a few very large companies, some of which are also in these sectors. Their very size could make them more able to withstand a few months of extremely low income than most. “

The rebound in the S&P 500 therefore likely overestimated economic optimism, Jones said, noting that the benchmark European and US small-cap indices are still in bearish territory.

Bond markets have suggested investors are expecting a tough economic time ahead with 10-year US Treasury yields US10YT = RR flat at 0.65%, down from 1.91% at the start of the year .

The drop reduced the US dollar’s advantage over its peers and left it on the edge for the past few weeks. So far in April, the dollar = USD index has fluctuated between 98,813 and 100,940 and was the last at 99,791.

The dollar was a firmer fraction on the yen on Monday at 107.63 JPY = but again well in recent ranges, while the euro was idling at 1.0868 USD =.

Gold fell to $ 1,676 an ounce XAU = after hitting a 7-1 / 2 peak of $ 1,746.50 last week.

Oil prices remained under pressure as the global foreclosure saw the demand for fuel evaporate, which prevented so many more countries from finding space to store it.

The short-term glut was so great that the May crude oil futures contract traded 7% at $ 16.96 a barrel CLc1, while June stood at $ 24.28 CLc2.

Futures on Brent LCOc1 already rolled in June and this contract was 32 cents at $ 27.75 a barrel.

Our standards:Principles of the Thomson Reuters Trust.

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