CFD Markets News and Forecasts — 13-04-2020

April 14

Before the Open:

Johnson & Johnson (JNJ). Consensus EPS $1.96, Consensus Revenues $19435.79 mln

JPMorgan Chase (JPM). Consensus EPS $1.88, Consensus Revenues $29452.67 mln

Wells Fargo (WFC). Consensus EPS $0.41, Consensus Revenues $19313.95 mln

After the Close:

United Airlines (UAL). Consensus EPS -$2.68, Consensus Revenues $8225.48 mln

April 15

Before the Open:

Bank of America (BAC). Consensus EPS $0.59, Consensus Revenues $22584.38 mln

Citigroup (C). Consensus EPS $1.50, Consensus Revenues $18960.43 mln

Goldman Sachs (GS). Consensus EPS $3.33, Consensus Revenues $7895.59 mln

Morgan Stanley (MS). Consensus EPS $1.11, Consensus Revenues $9796.80 mln

UnitedHealth (UNH). Consensus EPS $3.67, Consensus Revenues $64254.30 mln

April 16

Before the Open:

Delta Air Lines (DAL). Consensus EPS -$0.86, Consensus Revenues $9360.44 mln

Honeywell (HON). Consensus EPS $1.99, Consensus Revenues $8705.24 mln

U.S. stock-index futures fell on Monday after an impressive week of gains, as investors awaited the Q1 earnings-reporting season, while continuing to digest the impact of the coronavirus and OPEC+ deal on a massive production cut.

Global Stocks:

(company / ticker / price / change ($/%) / volume)

Tesla (TSLA) target lowered to $500 from $730 at Bernstein

Caterpillar (CAT) downgraded to Underperform from Neutral at BofA/Merrill; target $115

Deere (DE) downgraded to Neutral from Outperform at Robert W. Baird; target $150

FedEx (FDX) upgraded to Buy from Neutral at BofA/Merrill; target raised to $140

Travelers (TRV) upgraded to In-line from Underperform at Evercore ISI; target $117

FXStreet reports that JP Morgan predicts that the U.S. economy would contract by a staggering 40% in the April to June period, forcing 25 million people out of job due to the worsening coronavirus outbreak. 

A few weeks ago, the investment bank had forecasted a 25% contraction in the second quarter. 

The U.S. has surpassed Italy as the country with the highest number of coronavirus deaths. The world's biggest economy has recorded than 21,000 fatalities, according to NBC news figures.

Germany's chancellor Merkel and premiers of Germany's 16 states expect to get recommendations from the German National Academy of Sciences on Monday, according to Reuters. And these recommendations are to weigh heavily in considerations for a possible loosening in movement and social distancing rules, which were imposed around mid-March. The discussion takes place as the number of new cases and deaths drops in the country.

The chancellor plans to discuss the recommendations with her cabinet on Tuesday and to hold a video conference with the state governors to discuss a possible path out of the lockdown on Wednesday.

Over the Easter weekend, Armin Laschet, the conservative governor of North Rhine-Westphalia, Germany's most populous state, sent recommendations of his state's experts to the chancellor and his fellow premiers. He has emphasized the importance of easing restrictions.

A combination of unprecedented policy support and a flattening viral curve has “dramatically” cut risks to both markets and the American economy, Goldman Sachs Group's strategists, including David Kostin, wrote in a note Monday, Bloomberg reported. If the U.S. doesn’t have a second spike in infections after the economy reopens, equity markets are unlikely to make new lows, they added.

“The Fed and Congress have precluded the prospect of a complete economic collapse,” the strategists noted. “These policy actions mean our previous near-term downside of 2,000 is no longer likely” for the S&P 500 Index.

The strategists cited policy measures including rate cuts, the Federal Reserve’s Commercial Paper Funding Facility and fiscal stimulus such as the $2 trillion CARES act among the “numerous and increasingly powerful” actions that have spurred equity investors to take a risk-on view.

Meanwhile, they expect investors to look through first-quarter results from the upcoming earnings season, and focus instead on the outlook for 2021.

“Despite the likely steady stream of weak earnings reports, 1Q earnings season will not represent a major negative catalyst for equity market performance,” they wrote. “Our year-end S&P 500 target remains 3,000.”

• Says that health officials are hopeful reopening measures could "probably start at least in some ways next month," depending on the status of outbreak in different states and cities
• Sees some indications that outbreak is "starting to turn the corner"; any return to normal life in U.S will occur in "gradual" or "rolling" reentry
• Adds despite hopes for a reopen, "there is always the possibility, as we get into next fall and the beginning of early winter, that we could see a rebound [of the virus]"

"The authorities are considering plans to hold sessions with about 100 MPs on a video link and a minister and shadow minister in the chamber alongside the Speaker and the clerks", The Times reports.

According to the report, parliamentarians would use a messaging system to ask if they could intervene in the debate and they would be muted unless they were directly asking a question.

Reuters reports that according to Goldman Sachs, oil prices would continue to fall in the coming weeks, reasoning that a "historic yet insufficient" deal by major oil producers to cut output is unlikely to offset a coronavirus-led demand rout.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, a grouping known as OPEC+, said they had agreed to reduce output by 9.7 million barrels per day (bpd) for May and June to stem a slump in prices.

The bank saw downside risks to its short-term oil price forecast of around $20 per barrel for Brent, but projected the global crude benchmark would outperform U.S. oil because OPEC+ producers' exports would likely fall, freeing up floating storage space.

Even with core-OPEC members fully complying with the cuts, and 50% compliance by all other countries that have agreed to curb production in May, the voluntary cuts would translate into a reduction of only 4.3 million bpd from first-quarter levels, the bank said.

A bigger output cut by G20 nations would also not help much, it said.

"Ultimately, this simply reflects that no voluntary cuts could be large enough to offset the 19 million bpd average April-May demand loss due to the coronavirus."

FXStreet reports that the rebound in AUD/USD is seen facing a tough hurdle in the 0.6430 area, suggested FX Strategists at UOB Group.

24-hour view: "AUD rose sharply last Thursday but spent most of last Friday trading in a relatively narrow range between 0.6312 and 0.6369. The combination of overbought conditions and waning momentum indicates limited upside risk in AUD for today. AUD is more likely to continue to consolidate even though the weakened underlying suggests a lower trading range of 0.6295/0.6360."

Next 1-3 weeks: "In our update from last Wednesday (08 Apr, spot at 0.6150), we indicated that 'upward momentum has improved but AUD has to close above 0.6230 before a sustained advance can be expected'. AUD subsequently closed at 0.6232 on Wednesday before staging a strong rally that led to a high of 0.6369 on Friday. The rapid rise has moved into overbought territory but this does not ruled out further gains from here. That said, any advance is expected to encounter solid resistance at 0.6430. On the downside, only a breach of 0.6230 would indicate that a short-term top is in place."

Bloomberg reports that without an effective therapy or a vaccine for the novel coronavirus, the U.S. economy could face 18 months of rolling shutdowns as the outbreak recedes and flares up again, Federal Reserve Bank of Minneapolis President Neel Kashkari said.

"We're looking around the world. As they relax the economic controls, the virus flares back up again," Kashkari said.

"We could have these waves of flareups, controls, flareups and controls until we actually get a therapy or a vaccine. I think we should all be focusing on an 18-month strategy for our health care system and our economy."

Unemployment has skyrocketed in the U.S. over the last few weeks as state and local governments have ordered businesses to close their doors in a bid to contain the spread of the virus.

Kashkari warned that "this could be a long hard road that we have ahead of us until we get either to an effective therapy or a vaccine."

"It's hard for me to see a V-shaped recovery under that scenario," he said.

"On the advice of his medical team, the PM will not be immediately returning to work. He wishes to thank everybody at St Thomas' for the brilliant care he has received," a spokesman for Downing Street said.

The U.K. has the fifth-highest number of coronavirus fatalities of any country in the world at 9,875, according to the latest figures from Johns Hopkins University, with 79,885 cases.

FXStreet reports that USD/CNH could extend the drop to the 7.0100 region once 7.0350 gives way, in opinion of FX Strategists at UOB Group.

24-hour view: "USD dropped to 7.0370 before rebounding. Despite the bounce, it is too early to expect a sustained recovery. From here, USD is more likely to consolidate and trade sideways between 7.0350 and 7.0650."

Next 1-3 weeks: "In our latest update from last Wednesday (08 Apr, spot at 7.0720), we held the view that 'last month's 7.1652 high could remain as a top for a while more; risk for USD has shifted to the downside towards 7.0350'. USD subsequently dropped to 7.0370 last Friday. While reaching oversold, the outlook for USD is still weak. That said, 7.0350 is a solid support and USD to close below this level before further weakness towards the next support at 7.0100 can be expected. Overall, USD has to move back above 7.0820 in order to indicate that the current downward pressure has eased."

FXStreet reports that cable could be headed towards the 1.2550 region in the next weeks, noted FX Strategists at UOB Group.

24-hour view: "The quiet consolidation in GBP last Friday has resulted in momentum turning flat. In other words, GBP is expected to trade sideways for today, likely between 1.2425 and 1.2490."

Next 1-3 weeks: "While GBP rose and touched a 1-month high of 1.2488 last week, upward momentum has not improved by much. However, the bias from here is for further GBP strength towards 1.2550. Looking ahead, GBP could move above 1.2550 but the odds for a sustained advance above the next resistance at 1.2600 are not high for now. On the downside, a breach of 1.2350 ('strong support' level) would indicate the current mild upward pressure has eased."

FXStreet reports that FX Strategists at UOB Group noted EUR/USD is expected to maintain the current consolidative mood for the time being.

24-hour view: "After rising rapidly last Thursday, EUR traded in quiet manner and within a narrow range (between 1.0917 and 1.0951) on Friday. The consolidation has resulted in a rapid loss in momentum and the risk for a sustained advance in EUR for today is low. EUR is more likely to drift lower but any weakness is viewed as part of 1.0880/1.0950 range (a clear break of 1.0880 is not likely for today)."

Next 1-3 week: "There is not much to add to the update from last Wednesday (08 Apr, spot at 1.0890). As highlighted, EUR has moved into a consolidation phase and is expected to trade between 1.0750 and 1.1000 for a period. After the rapid but short-lived swings over the several weeks, the overall outlook is mixed for now."

• The number of new cases in mainland China ticked up again, past the 100-mark. The National Health Commission said the country had 108 new confirmed cases, with 98 attributed to travelers from overseas.

• Singapore reported 233 new cases as of noon on April 12, according to its health ministry. It said 167 of those cases have no links to known clusters or cases.

• Deaths from the Covid-19 epidemic in Italy rose by 431, down from 619 the day before, and the number of new cases slowed to 4,092 from a previous 4,694. The tally of deaths was the lowest daily rise since March 19.

• Global cases: At least 1,846,680.

• Global deaths: At least 114,090.

• Most cases reported: United States (555,313), Spain (166,831), Italy (156,363), France (133,670), Germany (127,854).

EUR/USD

Resistance levels (open interest**, contracts)

$1.1074 (1481)

$1.1047 (745)

$1.1026 (739)

Price at time of writing this review: $1.0936

Support levels (open interest**, contracts):

$1.0882 (1306)

$1.0858 (1192)

$1.0830 (1726)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date May, 8 is 64789 contracts (according to data from April, 9) with the maximum number of contracts with strike price $1,1200 (3211);

GBP/USD

Resistance levels (open interest**, contracts)

$1.2617 (629)

$1.2573 (207)

$1.2541 (286)

Price at time of writing this review: $1.2475

Support levels (open interest**, contracts):

$1.2338 (298)

$1.2282 (570)

$1.2214 (572)

Comments:

- Overall open interest on the CALL options with the expiration date May, 8 is 13642 contracts, with the maximum number of contracts with strike price $1,2600 (948);

- Overall open interest on the PUT options with the expiration date May, 8 is 15560 contracts, with the maximum number of contracts with strike price $1,2850 (1073);

- The ratio of PUT/CALL was 1.14 versus 1.13 from the previous trading day according to data from April, 9

* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.

** - Open interest takes into account the total number of option contracts that are open at the moment.