Wall Street jumps at open as jobless claims raise hopes of more stimulus

(Reuters) – Wall Street jumped at the open on Thursday, building on a two-day rally, as investors bet on more stimulus measures after the U.S. jobless claims surged past 3 million last week, underscoring the economic impact of the coronavirus pandemic.

The Dow Jones Industrial Average .DJI rose 267.83 points, or 1.26%, at the open to 21,468.38. The S&P 500 .SPX opened higher by 25.73 points, or 1.04%, at 2,501.29, while the Nasdaq Composite .IXIC gained 77.91 points, or 1.06%, to 7,462.21 at the opening bell.

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Wall Street Week Ahead: Fund rebalancing could help buoy stock rebound

NEW YORK (Reuters) – Money managers rebalancing their portfolios to boost equity exposure into the end of the quarter may support the nascent stock rally that has followed the steep coronavirus-fueled market drop.

With the S&P 500 having lost around a third of its value in the recent selloff, investors may need to step up their equity purchases and sell bonds in order to maintain allocation targets.

A portfolio that had stock allocations at 60% and bond allocations at 40% in mid-February may now be more evenly split between the two asset classes, facilitating the need for some investors to shift exposure toward stocks.

“Given the many trillions of dollars in assets that follow some sort of multi-asset class approach, the coming rebalance could well be in the range of a few hundred billion,” Jurrien Timmer, director of global macro in Fidelity’s global asset allocation division, wrote in a note to clients this week.

Funds can raise stock allocations in several ways, including selling bonds to buy stocks, using the cash in their portfolios or putting fresh money toward equities, said Leo Acheson, director of multi-asset ratings at Morningstar.

From speaking with portfolio managers, Acheson said many have not been waiting for quarter-end to make adjustments and instead are revisiting their portfolios daily and adjusting the split between equities and bonds to maintain their desired risk exposure.

“As managers rebalance and reallocate toward equities to get back toward their strategic weights … that would be a support for equities,” he said.

U.S. stocks have bounced more than 17% from their lows this week following unprecedented stimulus measures from the Federal Reserve and U.S. Senate passage of a $2 trillion bill aimed at helping unemployed workers and industries hurt by the coronavirus pandemic. Few believe the volatility in markets has ended, as the outbreak’s trajectory remains uncertain and the economic fallout potentially massive.

Still, the Fed’s pledge to buy billions of dollars worth of bonds, including $75 billion in U.S. Treasury securities a day this week, may be a boon to those looking to rebalance.

“You are buying equities at significantly lower prices than they were and you are selling bonds that are being artificially bid up by the Federal Reserve,” said Michael O’Rourke, chief market strategist at JonesTrading in Stamford, Connecticut.

The flows generated by rebalancing appear to have a noticeable impact on asset prices, especially when bond performance trounces that of equities, as has occurred so far in March.

On average, the S&P 500 has climbed nearly 7% over the final five days of a month in which bonds outperformed stocks by at least 10% during the month’s first few weeks, according to Christopher Murphy, co-head of derivatives strategy at Susquehanna Financial Group, citing eight such previous occurrences in data back to 1990.

The iShares Core US Aggregate Bond ETF (AGG.P) has fallen just 1% so far in March, against an 11% slide in the S&P 500 .SPX, as of Thursday, though that performance gap narrowed this week.

Pensions, endowments and foundations – overseeing as much as $15 trillion in assets – are among those that often look to adjust their portfolios around quarter end, said Steve Foresti, chief investment officer at Wilshire Consulting.

“All else equal, these institutions are fairly significantly under their target weight to equities, meaning they need to purchase to get back to their target,” Foresti said. “There is no question there is some natural buying and selling around those rebalancing activities.”

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Global oil refiners shut down as coronavirus destroys demand

SINGAPORE/NEW DELHI/SEOUL/LONDON (Reuters) – The first oil refinery shutdowns in India and Europe were announced on Friday while global refinery runs drop like a stone in response to plunging demand as countries worldwide implement lockdowns.

Italy’s API said it would close operations temporarily at its Ancona refinery, which has capacity of 85,000 barrels per day (bpd). In India, top refiners Indian Oil Corp (IOC.NS) and Mangalore Refinery and Petrochemicals (MRPL.NS) declared force majeure, with MRPL in the process of shutting down its entire plant.

Global fuel demand is set to drop by as much as 15% to 20% in the second quarter after the coronavirus pandemic, which has killed more than 22,000 people, halted most worldwide air travel and prompted the national lockdowns to keep people at home.

The resulting slump in demand for oil products, along with Saudi Arabia and Russia’s decisions to increase crude output after last month’s collapse of OPEC’s oil supply pact, is expected to overwhelm refiners as storage capacity dwindles.

A source with knowledge of the matter said that Spain’s Repsol would cut runs by about 10% at its complex refineries.

In Asia, home to more than a third of global refining capacity, India’s top refiner IOC said in a letter to crude suppliers that it had reduced runs by up to 40% and closed its Panipat naphtha cracker plant because of sliding petrochemicals demand.

Meanwhile, operators in Japan, South Korea and Thailand – already running at reduced rates – are looking at more cuts even as they shut plants for maintenance.

India’s Reliance Industries (RELI.NS), operator of the world’s largest refining complex, has made a rare move to sell prompt crude as it plans to cut output in April.

Several U.S. refineries have also cut production, including plants in the Los Angeles area, a busy hub for air travel, and Exxon’s (XOM.N) Baytown facility in Texas.

The Baytown plant, Exxon’s largest in the United States, is shutting a gasoline-making unit as U.S. fuel demand tumbles.

Overall products supplied in the United States fell by 2.1 million bpd in the most recent week, representing close to a 10% drop, while IHS Markit estimates that gasoline demand in the world’s biggest oil consumer could drop by nearly half in the coming weeks.

In Europe, some refineries in Britain and Germany have scaled back production, with traders expecting many others to follow as demand falters. ExxonMobil’s French subsidiary on Friday said it would adapt production to falling demand.

Independent refiner Phillips 66 (PSX.N) said its first-quarter refinery utilisation rate was in the low-to-mid-80s range, with many refineries operating near minimum rates.

China is an outlier, having restarted its economy after weeks of lockdown, with its refining sector showing signs of recovery after a decline in the number of new virus cases.

GLOBAL SLIDE

Demand is likely to slump by 18.7 million barrels per day (bpd) globally in April, against a 10.5 million bpd drop in March, Goldman Sachs analysts said. Total annual consumption is expected to drop by 4.25 million bpd from 2019, they added.

“Such a collapse in demand will be an unprecedented shock for the global refining system,” the analysts said.

Asia accounts more than 60% of global oil demand growth.

The coronavirus pandemic has roiled financial markets, with oil hit particularly hard. Crude prices have crashed by about 60% so far this year – on track for the biggest quarterly loss on record. [O/R]

Asian refiners are losing money as domestic demand dries up and bleak margins make for diminishing prospects from exports.

A complex refinery in Singapore stands to lose nearly $2 for every barrel of crude it processes, including losses of more than $6 a barrel on gasoline production, Reuters calculations show. DUB-SIN-REF GL92-SIN-CRK

To make matters worse, some refiners have been unable to use the downtime for maintenance because of manpower shortages after lockdowns and travel curbs.

“This first quarter would be the worst first quarter we have ever seen as producing oil products was loss-making,” said Cho Sang-bum, an official at the Korea Petroleum Association.

PROFIT WARNINGS

South Korea run rates fell to 82.8% in February, the lowest for the month since 2014. The cuts are unlikely to stop there, however, with demand for gasoline and diesel expected to fall 30% year on year in March, according to sources and data from the Korea National Oil Corp. C-OPRATE-KW

Japan is also considering more cuts after run rates fell nearly 7% for the first 12 weeks in 2020, data from the Petroleum Association of Japan showed.

The country’s top refiner, JXTG (5020.T), expects a record net loss of 300 billion yen ($2.7 billion) for its 2019/20 financial year, while Hyundai Oilbank [INPTVH.UL] is planning to cut expenses by 70% to help to offset the decline in margins.

In India, refiners are facing a tough situation with cash flow, an official at one of the state refiners said. Their tanks are full, retail income has virtually disappeared and they must continue to make payments for crude imports to avoid default, the official added.

U.S.-based Phillips 66 said it would cut expected capital expenditure by 18% in 2020 and that most units are running at minimum capacity. Demand is also sliding in Latin America, which had been the primary destination for U.S. refined product exports.

China, by contrast, is expected to lift average run rates by 3% year on year to 77% in the second quarter, from 63% in February, said Seng Yick Tee of Beijing consultancy SIA Energy.

Major refineries are optimising run rates for petrochemical feedstock, while low oil prices, stimulus measures and recovering business activity are spurring demand, the analyst added.

(This story has been refiled to add dropped word in paragraph six)

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Coronavirus: Gatwick to close north terminal as flights dwindle

London’s second-busiest airport is to close one of its two terminals after a slump in flights triggered by the COVID-19 pandemic.

Sky News has learnt that Gatwick Airport has decided to temporarily shut its north terminal – used by carriers including easyJet – from the end of the month.

The decision, which is expected to be announced later on Friday, stops short of a full closure of Gatwick, although that option is understood to be being kept on the table as repatriation flights come to an end.

London City Airport has already announced its closure for several weeks, while Heathrow and Stansted, as well as numerous regional airports, have seen catastrophic falls in passenger volumes since the coronavirus outbreak.

Airport operators are in talks with the government about a rescue package as their revenues crash to their lowest-ever levels.

Rishi Sunak, the chancellor, wrote to aviation bosses this week to tell them that a “bespoke” support package might be available to individual companies once private sources of capital have been exhausted.

Gatwick is majority-owned by VINCI, the largest private airport operator in the world.

It serves 46m passengers each year, flying to 230 destinations in more than 70 countries.

Last week, Gatwick announced that Stewart Wingate, its chief executive, and his executive team would take a 20% salary cut and waive any bonus for the current financial year.

It also said it was axing 200 staff employed on temporary fixed-term contracts and contractors.

Further cost-cutting measures are expected in the coming weeks.

“Gatwick is a resilient business, but the world has changed dramatically in recent weeks and we have been forced to take rapid, decisive action to ensure that the airport is in a strong position to recover from a significant fall in passenger numbers,” Mr Wingate said last week.

A Gatwick spokesman declined to comment.

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Instacart Shoppers Plan to Strike Over Coronavirus Protections

As many as 200,000 workers could walk off the job unless demands for improved equipment and hazard pay are met.

By Derrick Bryson Taylor

Employees of Instacart, a tech company that delivers groceries and other household items ordered through an app, plan a nationwide strike on Monday, maintaining that the company has not provided them with supplies to protect them from being infected during the coronavirus pandemic.

It is unclear how many employees might strike. The company has approximately 200,000 shoppers, with plans to add 300,000 over the next three months.

The shoppers are independent contractors who can work as little or as much as they want. On average, they shop fewer than 10 hours per week, said the company, which partners with more than 350 retailers, including Costco, CVS Pharmacy, Petco, Target and Wegmans.

The planned strike comes as more and more people stay at home during the pandemic and come to rely on grocery delivery services to avoid visits to public spaces like supermarkets.

In an announcement with the Gig Workers Collective, an activist group, Instacart employees said the company’s “mistreatment of shoppers has stooped to an all-time low.”

“They are profiting astronomically off of us literally risking our lives, all while refusing to provide us with effective protection, meaningful pay and meaningful benefits,” the announcement said.

Instacart workers are demanding that the company supply them with personal protection equipment, like hand sanitizer, disinfectant wipes, sprays and soap.

Workers have asked for hazard pay — an extra $5 per order — and for the default of the in-app tip to be set to at least 10 percent of the order total. They are also seeking an expansion of pay for workers affected by Covid-19, the illness caused by the coronavirus.

Shoppers’ earnings vary depending on how many batches they choose to shop. The company said it was committed to an earnings structure that offered upfront pay and guaranteed minimums, which can vary from $7 to $10 per batch, depending on the market, and do not include customer tips.

The company this month announced new guidelines and policies to support the health and safety of its shoppers during the coronavirus outbreak, which has led to more than 1,800 deaths and more than 100,000 infections in the United States.

The company said it had secured hand sanitizer for the workers and that it would extend to May 8 its 14-day paid leave policy of hourly employees and full-service shoppers who have Covid-19 or are placed in isolation.

The company also said it would offer bonus pay of $25 to $200 for select employees based on hours worked from March 15 through April 15.

“The health and safety of our entire community — shoppers, customers and employees — is our first priority,” a company spokeswoman said. “We want to underscore that we absolutely respect the rights of shoppers to provide us feedback and voice their concerns.”

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Asia shares rise on more stimulus hopes but dollar loses steam

TOKYO (Reuters) – Asian stocks rose on Friday as investors wagered policymakers will roll out more stimulus measures to combat the coronavirus pandemic after U.S. unemployment filings surged to a record.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.2%. Australian shares gave up gains to fall 1.09%, but Japan’s Nikkei rose 1.44%.

E-Mini futures for the S&P 500 reversed course and fell 0.95% in Asia following three consecutive days of gains in the S&P 500 on Wall Street.

The dollar nursed losses against major currencies as central banks’ steps to solve a dollar shortage in funding markets started to gain traction.

The U.S. House of Representatives is expected to pass a $2 trillion stimulus package later on Friday that will flood the world’s largest economy with money to stem the damage caused by the pandemic.

The U.S. Federal Reserve has already slashed rates to zero and launched quantitative easing. The Fed will also take the unprecedented step of offering a direct backstop for corporate loans.

The United States is now the country with the most coronavirus cases, surpassing even China, where the flu-like illness first emerged late last year. Policymakers may need to offer more stimulus as the virus slams the brakes on economic activity and increases healthcare spending.

“I’m not sure what measures are left, but the reaction in stocks shows some people hoping for more stimulus thought the market was a little oversold,” said Yukio Ishizuki, FX strategist at Daiwa Securities in Tokyo.

“Currencies tell a different story. The dollar is the lead actor. The mad rush to buy dollars due to liquidity concerns is starting to fade.”

The number of Americans filing claims for unemployment benefits surged to a record of more than 3 million last week as strict measures to contain the virus pandemic ground the country to a sudden halt, data showed on Thursday.

The jobless blowout was announced shortly after Fed Chairman Jerome Powell said the United States “may well be in recession”, an unusual acknowledgement by a Fed chair that the economy may be contracting even before data confirms it.

Global equity markets took the data in their stride, partly as most central banks have already aggressively eased policy and governments are backing this up with big fiscal spending.

Chinese shares, battered this month because of the virus, rose 0.8% on Friday. Shares in South Korea, another country hit hard by the pandemic, jumped by 1.62%.

Leaders of the Group of 20 major economies pledged on Thursday to inject over $5 trillion into the global economy to limit job and income losses from the coronavirus.

CURRENCY MARKET

In the currency market, the greenback fell 0.89% to 108.64 yen in Asia, on pace for a 2% weekly decline.

The dollar was also headed for weekly declines against the Swiss franc, pound, and euro.

The U.S. currency’s fall after two weeks of gains suggests that the Fed’s efforts to relieve a crunch in the dollar funding market are working, some analysts said.

The yield on benchmark 10-year Treasury notes rose slightly in Asia to 0.8160%, while the two-year yield edged up to 0.2809%.

Yields were still headed for a weekly decline, taking cues from the Fed’s extraordinary steps to bolster markets and the $2 trillion stimulus package.

U.S. crude ticked up 2.08% to $23.07 a barrel. Brent rose 1.14% to $26.64 per barrel. Energy markets have been caught in a tug-of-war between hopes for stimulus spending and worries about excess oil supplies.

Gold, normally bought as a safe haven, was slightly lower. Spot gold fell 0.44% to $1,626.16 per ounce.

Gold market participants remained concerned about a supply squeeze after a sharp divergence between prices in London and New York. The virus has grounded planes used to transport gold and closed precious metal refineries.

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Singapore Airlines obtains $13 billion rescue package amid coronavirus shock

SINGAPORE (Reuters) – State investor Temasek Holdings and others will inject as much as S$19 billion ($13.27 billion) of liquidity into Singapore Airlines (SIA) (SIAL.SI) in the single biggest rescue for an airline slammed by the coronavirus pandemic.

The massive financing plan, which drove SIA shares down as much as 10.5% on Friday, underscores the depth of financial trouble for the global airline industry, with nearly one-third of the world’s aircraft already grounded because of the pandemic, according to data provider Cirium.

Many governments worldwide have already stepped in to help airlines amid the virus-induced travel slump, with the United States offering $58 billion in aid. Many carriers have grounded fleets and ordered thousands of workers on unpaid leave to keep afloat.

The S$5.3 billion equity and up to S$9.7 billion convertible note portions of the Singapore Airlines fundraising are being underwritten by Temasek, which owns about 55% of the group.

The carrier has also obtained a S$4 billion bridge loan facility with the country’s biggest lender, DBS Group Holdings Ltd (DBSM.SI), to support near-term liquidity requirements.

“This is an exceptional time for the SIA Group,” SIA Chairman Peter Seah said in a statement late on Thursday.

SIA’s shares went into a rare trading halt earlier Thursday after plunging to their lowest in 22 years this week as investors feared the virus will have a deep impact on the company.

“Under the current dire circumstances, the rights issue is the best tactical move for SIA. It underscores the carrier’s strategic importance to Singapore and the island state’s position as both a financial center and aviation hub,” Shukor Yusof, head of aviation consultancy Endau Analytics, said in a blog post.

SIA has said it would cut capacity by 96%, ground almost its entire fleet and impose cost cuts affecting about 10,000 staff amid what it called the “greatest challenge” it had ever faced.

The rights issue will be offered at S$3 per share, a 53.8% discount to SIA’s last traded price of S$6.5.

“While the raising looks earnings and valuation decretive, SIA now looks well positioned to ride out the storm with balance sheet concerns largely de-risked,” BofA analysts told clients.

Temasek International Chief Executive Dilhan Pillay Sandrasegara said the deal would not only tide SIA over a short-term liquidity challenge but would position it for growth beyond the pandemic.

SIA said it would use the funding from the rights issues to beef up its capital and operational expenditure needs.

On Thursday, the Singapore government announced more than $30 billion in new measures to help businesses and households brace against the pandemic.

Finance minister Heng Swee Keat had also said that SIA would announce support from Temasek and that he welcomed Temasek’s decision to support the airline.

Qantas Airways (QAN.AX) this week secured A$1.05 billion ($636.1 million) against its aircraft fleet.

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Asian stocks scratch gains but lose steam on U.S. job jitters

SINGAPORE (Reuters) – Asian stocks eked out gains on Thursday, but the week’s rally lost steam as investors seemed torn between relief at the agreement of a huge U.S. stimulus package and dread over a likely spike in jobless claims and coronavirus cases.

After last-minute negotiations, the Senate backed a $2 trillion bill aimed at helping workers and industries hurt by the pandemic. Yet concern has already turned to whether that will be enough to cushion a heavy economic blow.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.3% but regional performances were patchy.

The Nikkei snapped three days of gains with a 3.5% drop, while Australia’s benchmark rose for a third day – its longest winning streak in six weeks.

Currency markets also hinted at the sense of uneasiness – the risk-exposed Australian dollar sank, the safe haven yen rose, but so too did many emerging market currencies.

Oil fell and U.S. and European stock futures turned red after bobbling into positive territory during the session. E-mini futures for the S&P 500 last traded down 1% and EuroSTOXX 50 futures were down 1.4%.

“After this crazy three weeks of trading we are now coming to a more static state,” said Margaret Yang, market analyst at brokerage CMC Markets in Singapore. “Bulls and bears are fighting each other, with equal strength.”

Global markets have lost about a quarter of their value in the last six weeks of virus-driven selling.

The passage of the stimulus bill through the Senate, as expected, brushed Asian indexes slightly higher but gains were marginal and ephemeral. The Hang Seng and Shanghai Composite soon returned to negative territory.

The package will now head to the House of Representatives, which could vote sometime this week. Before that will come a glimpse of the scale of economic destruction already wrought.

Initial jobless claims in the United States are due at 1230 GMT, with forecasts in a Reuters poll ranging from 250,000 claims all the way up to 4 million.

RBC Capital Markets economists had expected a national figure over 1 million, but say “it is now poised to be many multiples of that,” as lockdowns drive deep layoffs.

“Something in the 5-10 million range for initial jobless claims is quite likely,” they wrote in a note. That compares to a 695,000 peak in 1982.

Citi Private Bank said the peak total could reach 15-18% of the total U.S. workforce, some 25 million people.

U.S. Federal Reserve Chairman Jerome Powell is also due to appear on NBC television around 1100 GMT.

‘WE DON’T KNOW HOW BAD IT COULD BE’

The money at stake in the stimulus bill amounts to nearly half of the $4.7 trillion the U.S. government spends annually.

But it comes against a backdrop of bad news as the coronavirus spreads and more signs of economic damage.

“There has been so much stimulus thrown at this,” said Jun Bei Liu, portfolio manager at Tribeca Investment Partners in Sydney. “But the positivity related to it is really just sentiment,” she said. “We don’t know how bad it could be.”

Dire data from Singapore offered the latest clue, with the economy suffering its biggest contraction in a decade in the first quarter and factories posting their largest output drop since records began in 1983.

Tokyo’s governor asked residents to avoid going out and to “act with a sense of crisis”. Spain’s coronavirus death toll has overtaken China’s and more than 21,000 people have died globally.

In currencies, the mood drove weakness in both the U.S. dollar and the riskier Aussie.

The Australian dollar was last down 0.6% at $0.5924 and 1% weaker on the rising yen.

The safe-haven yen rose 0.4% to 110.70 per dollar and the softer greenback buoyed emerging market currencies, with MSCI’s emerging markets currencies index touching a one-week high.

Oil edged lower with fears of plunging demand just outweighing stimulus hopes. U.S. crude futures slipped 30 cents to$24.19 per barrel and Brent crude futures fell 0.5% to $27.26.

Gold fell 0.7% to $1,602.00 per ounce.

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Investors look to 2008 for guidance on when to jump back in

LONDON (Reuters) – Investment banks are dusting off models from the 2008 financial crisis to gauge the right time to buy back into stock markets that have plunged 30% from their February record highs because of the coronvirus crisis.

That inflection point is not easy to model when the virus is still spreading rapidly across Europe and the United States.

But the U.S. government’s $2 trillion in fiscal stimulus, coming on top of unprecedented measures from the U.S. Federal Reserve and other central banks on Tuesday triggered one of the sharpest global equity market rallies in decades.

Wall Street’s so-called fear gauge, the Cboe Volatility Index has also fallen from its highs.

For some, the signals for a reversal are in place.

Veteran investor Bill Ackman told investors in his listed Pershing fund he had turned increasingly positive on stocks and credit, and taken off hedges he put in place in early March when markets first started cratering.

He said Pershing was “redeploying our capital in companies we love at bargain prices that are built to withstand this crisis”.

Goldman Sachs’ view was that this week’s record stock market rally had been led by “underweight” sectors, suggesting many funds had been covering short positions. Indeed, energy, travel and auto stocks were Tuesday’s biggest gainers.

At Morgan Stanley, Andrew Sheets, head of cross-asset strategy, said in these situations, including in 2008, markets often trough well before the crisis actually ends.

From the 2008 trough there followed a decade of stunning gains that added more than $25 trillion to global equity value.

“(The market) won’t need to see a peak in U.S. (Covid) cases, it just needs to see some confirmation of the path and it nees to be happy with the path,” Sheets said.

But so far he remains underweight credit and has only marginally upped equity exposure.

GETTING IT RIGHT

JPMorgan says there is more than one way of measuring it, especially given the unique nature of the crisis which hit the real economy first, with financial markets following.

John Normand, JPM’s head of cross-asset strategy said one model suggested now is the time to re-enter — a quarter before a recession is likely to end. His view is that the coronavirus-induced recession will be “undoubtedly deep but also possibly the shortest-ever.”

Normand also said investors could wait for “green shoots” or evidence of an actual upturn — reflected in a trough for JPMorgan’s global Purchasing Managers Index.

A third, valuation-based model triggers a “Buy” signal when risk-premia across several asset classes fall to certain “deep value” thresholds.

Norman said the latter two models were not yet signalling it was time to buy.

Notably, U.S. and European stock valuations based on a 12-month forward price-to-earnings ratios now have dipped well below historical averages, according to Refinitiv data.

Meanwhile, credit markets are still sending out distress signals — yields on junk-rated U.S. bonds are around 10% currently compared to 6% a month ago, meaning many companies may find it hard to service debt.

In Europe, an index of European credit default swaps, ITEXO5Y=MG that measure the default risk of a basket of sub-investment grade companies, is off its peaks but remains elevated at around 520 basis points, almost double end-February levels.

The volatility index’s (VIX) 30% drop from recent peaks is a clear positive for riskier assets. But if 2008 is any guide, its decline may not yet signal the market trough. In 2008, the VIX retreated from highs in October, but markets took another five months to bottom out.

The recession in 2008 was a long one — some economists reckon this time a turnaround in global growth will come by the third quarter.

Yet some also warn that markets are only now coming to grips with how severe a potential downturn could be.

“We … haven’t fully appreciated how far this recession will go,” said Andrea Cicione, head of strategy at TS Lombard, in London. Some of her concerns center on potential second-round effects such as rising unemployment and companies slashing their capital expenditures.

For now, the trajectory of the coronavirus and its economic fallout will play a key role in determining the market’s path, said Randy Watts, chief investment strategist at William O’Neill+Co.

“In the short run, the market is still going to stay very volatile until one of three things happens – either the number of deaths and the number of new infections in the U.S., peak, there is some kind of a cure or vaccine developed or until the U.S. economy begins to reopen,” he said.

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Coronavirus: Tesco becomes latest grocery chain to impose safety measures

Supermarkets and convenience stores are introducing measures to help keep staff and customers as safe as possible amid lockdown conditions across the UK.

With non-essential retail closed, grocery outlets and pharmacies are on the front line to keep the UK fed and watered to comply with Boris Johnson’s restrictions on movement to slow the spread of COVID-19.

Tesco was the latest to announce what it was doing as the industry moves to protect staff and customers.

The UK’s largest retailer said its measures included:

  • Floor markings in car parks
  • Limiting the flow of customers being allowed into stores when necessary
  • Hand sanitisers for customer and staff use
  • Floor markings and protective screens at checkouts

The rules were in line with those previously announced by rivals including Waitrose and Lidl.

Waitrose said it was bolstering social distancing measures within its stores in a bid to keep staff, known as partners, and customers as safe as possible.

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