G20 finance ministers and central bankers agreed this week to develop an “action plan” to respond to the coronavirus outbreak, which the International Monetary Fund expects will trigger a global recession. World Health Organization director-general Ghebreyesus will address the leaders to seek support for ramping up funding and production of personal protection equipment for health workers amid a worldwide shortage. King Salman of Saudi Arabia, which as this year’s G20 chair called for the extraordinary virtual summit, tweeted overnight that its goal was “to unite efforts towards a global response.” There are growing concerns about protectionist measures being discussed or adopted as countries scramble to respond to the virus. The U.S. Chamber of Commerce urged G20 leaders to match a pledge by countries like Australia and Canada to keep supply chains open and avoid export controls. The video-conference also risks complications from an oil price war between two members, Saudi Arabia and Russia, and rising tensions between two others, the United States and China, over the origin of the virus.
London stock markets fell after staging a robust recovery in the past two days as investors feared the incoming economic data will cement their worries of a sharp economic slump as the coronavirus crisis hits the entire world. After posting the biggest two-day percentage gain since the blue-chip index was launched in 1984, it dropped 2.6%. Data showed British retail sales failed to grow at all in February, even before shops shuttered due to the lockdown. Sales volumes were flat in February compared with the same month in 2019 after growth of 0.9% in January, the Office for National Statistics said. This was the first time sales have not grown since March 2013, when Britain was hit by the heaviest snowfall in 30 years. The outlook for retailers appears bleak, especially outside the food sector which has seen a temporary surge in demand as Britons stockpiled supplies in case they are trapped at home by illness or growing restrictions on movement. All eyes will turn to the U.S. jobless claims report, which many fear will be one of the worst in history.
European shares fell after gaining for two straight sessions, as the still rapidly spreading coronavirus and fears of a deep global recession overshadowed optimism from a historic $2 trillion U.S. fiscal stimulus deal. Eurostoxx was down 2%, with German shares down 1.8% as a survey showed consumer morale in Europe's biggest economy fell sharply to its lowest level since 2009. Italian and Spanish stock markets fell between 2.2% and 2.5% as the number of fatalities from COVID-19 in Italy topped 7,500, while those in Spain rose beyond 3,400 and exceeded the total death toll in China. Global stock markets also struggled to hold on to early gains as investors braced for a surge in U.S. jobless claims, with estimates ranging from 250,000 to a whopping 4 million as economic activity ground to a halt under state-wide lockdowns.
Oil prices slipped yesterday following three days of gains, with the prospect of rapidly dwindling demand due to coronavirus travel bans and lockdowns offsetting hopes a U.S. $2 trillion emergency stimulus will shore up economic activity. Brent crude trade now around $29.3 a barrel while West Texas Intermediate crude quotes $24.84 a barrel. Both contracts are down about 60% this year. The U.S. Senate overwhelmingly backed a $2 trillion bill aimed at helping unemployed workers and industries hurt by the coronavirus epidemic. Oil stocks are already rising with tanks around the world filling fast despite a 50%-100% jump in lease costs, as oil companies and traders scramble to park unwanted crude and refined products. U.S. crude inventories rose by 1.6 million barrels in the most recent week, the U.S. Energy Information Administration said, marking the ninth straight week of increases.