LOCKDOWN STAGE 4 – DAY 54 07 HOURS 14 MINUTES
By the close of business on Tuesday, the South African rand strengthened against the US dollar.
- News rippled through the markets of great progress in finding a COVID-19 vaccine and this lifted investors risk sentiment. Heavy hearts soared Monday with news that Moderna’s Covid-19 vaccine candidate — the frontrunner in the American market — seemed to be generating an immune response in Phase 1 trial subjects. The company’s stock valuation also surged, hitting $29 billion, an astonishing feat for a company that currently sells zero products. President Trump said at a roundtable Monday that he’s been taking the antimalarial drug hydroxychloroquine and a zinc supplement for “about a week and a half” as a preventative measure against the coronavirus.
- The UN health agency’s annual oversight convention, held for the first time ever by teleconference from Geneva on 18-19 May 2020, was focused intensely on defeating the novel coronavirus that has infected more than 4.7 million people worldwide, caused more than 316,100 deaths and thrown the futures of even the most robust economies into jeopardy. The event was punctuated by the assertion from the White House that the WHO did not act quickly enough in the early days of the COVID-19 outbreak to contain its spread. In a letter sent via Twitter on Monday to the WHO chief, US President Donald Trump set a 30-day deadline for the UN health agency to make significant reforms or risk losing future funding.
- China has branded Australia as looking like a “giant kangaroo that acts as the dog of the US” in the latest exchange of bizarre insults over escalating trade tensions. Amid fresh speculation that China could be preparing a “hit list” of Australian exports including wine and dairy, the war of words has escalated after barley exporters were hit with punitive tariffs this week.
- Local data showed that manufacturing production contracted for the ninth consecutive month in March.
- In the US, homebuilding dropped to the lowest level since 2015 and permits for future construction tumbled in April, underlining fears that the coronavirus crisis would lead to the deepest economic contraction in the 2Q20 since the Great Depression. Housing starts plummeted to a five-year low in April as builders paused activity amid the COVID-19 pandemic. Starts on both multifamily and single-family units dropped 30%, the biggest monthly decline in six decades of records, to a seasonally adjusted annual rate of 891,000 in April, the lowest level since February 2015, the Commerce Department said in a report on Tuesday.
- The US Fed Chairman, Jerome Powell, in his Senate Banking Committee testimony, stated that layoffs by state and local governments will slow the US economic recovery.
- The Boston Fed President, Eric Rosengren, stated that the US unemployment rate is likely to stay at double-digit levels by this year-end.
- The yield on benchmark government bonds rose yesterday. The yield on 2026 bond rose to 7.45%. Further, the yield on 2023 bond advanced to 4.91% while that for the longer-dated 2030 issue rose to 9.22%.
In early trade on Wednesday, the US dollar is trading 0.2% lower against the South African rand at R18.3074, while the euro is trading marginally higher at R20.0246. The British pound has declined 0.1% against the South African rand to trade at R22.4437.
By the close of trade on Tuesday, the euro declined against most of the major currencies.
- Just when it looked as if the economic gulf between Europe’s essential powers was starting to become unbridgeable, Germany and France lined up a deal worthy of Alexander Hamilton. The legendary U.S. treasury secretary forged a fiscal union after the American Revolution that helped prevent states from being bankrupted by their war debts.
- Boris Johnson’s chief Brexit negotiator accused the European Union of offering Britain only a “low-quality” trade deal as talks between the two sides descended into acrimony. In a dramatic intervention in the increasingly fractious negotiations over the future terms of U.K.-EU trade, David Frost complained that the bloc was treating Britain as “unworthy” of a fair deal.
- Meanwhile, German economic sentiment rose sharply in May, increasing for the second month in a row.
- Further, the eurozone economic sentiment surprisingly accelerated during the same period.
In early trade on Wednesday, the euro has advanced 0.1% against the US dollar to trade at $1.0938, while it has gained 0.1% against the British pound to trade at GBP0.8922.
Below is a link to a very detailed Covid-19 picture giving stats and graphs.