US jobless claims to reset record high
The key piece of data on the state of the US economy at the moment is the number of people who are seeking financial help from the government after losing their jobs.
Jobless claims data is forecast to be elevated for several weeks yet as companies at least temporarily lay off staff because of COVID-19 shutdowns.
RBC Capital Markets said it thinks last week’s print of just under 3.5 million is ripe for “a dramatic upward revision” to more than 5 million. “This week we look for another sizeable 4 million increase.”
Here’s what some other economists are forecasting for this week:
- TD Securities: 4.3 million “but caution it could be even higher”
- Pantheon Macroeconomics: 5.5 million
- SouthBay Research: 6.2 million
CBA to offset compound interest on deferred loans
CBA will return a portion of interest charges on home loan and credit card accounts that have been granted a six month deferral.
Deferred loans continue to accrue interest but CBA said it will return an amount equal to any interest charged on interested accrued during the six-month deferal period.
“This means for an average loan of $350,000, CBA will be refunding approximately $45 to offset the effect of interest on interest over the six month period. Customer payments will vary based on their loan amount and interest rate,” retail banking boss Angus Sullivan said in a statement.
Westpac has appointed 25-year veteran Peter King as its new CEO to cement its leadership at a time of heightened economic and financial market stress.
Mr King was appointed to the acting CEO role after former chief executive Brian Hartzer resigned in late November in the wake of a money laundering scandal that included claims the bank had helped facilitate child exploitation.
The new CEO has been appointed to an initial term of two years will be paid a base salary of $2.4 million and a short term variable reward of $2.4 million will be pro-rated up to September 30.
A long term incentive of $3.2 million will be pro-rated up to September 30.
Chairman John McFarlane said in moments of global stress and uncertainty, management stability and strength are vital.
“I believe we need a Chief Executive in place now, not later, and with full, rather than acting authority. On my recommendation, the Board has appointed Peter King as CEO. Peter has agreed to do this for two years. “I have built a strong relationship with Peter since we first met. He understands the bank, its business and its finances, and has the confidence of the management team, as well as my own and that of the Board.”
Mr King said his medium-term priorities remain to drive performance through its business and sharper accountability, simplify the business through digital transformation, and lift service culture and risk management capability.
Mr McFarlane said the Board and CEO had decided CEO and Group Executive annual Short-Term Variable Rewards for 2020 will be cancelled, in recognition of collective accountability for the financial crime outcomes in Westpac’s business which led to the action brought by AUSTRAC.
Aussie dollar tumbles 1pc overnight
The Australian dollar has tumbled 1 per cent during overnight trade as the US dollar rose for just the second time in the last eight sessions.
The Aussie fell 1 per cent to US60.74¢ in the last 24 hours, its second decline in as many days following a seven day rally.
The Bloomberg US dollar index rose 0.4 per cent overnight with the greenback remaining in demand for many investors.
That rise came as the US ISM manufacturing index fell less than expected in March, falling to 49.1 points from 50.1.
The economic uncertainty across the globe means the US dollar is likely to remain favoured for some time while the Australian dollar is only likely to face more pressure.
“Growing fears that prolonged shutdowns around the world will exacerbate the economic contraction will keep the Australian dollar and New Zealand dollar on the back foot,” said CBA currency strategist Kim Mundy.
ASX to drop, Wall St reels on virus data
Australian shares are poised to drop amid a renewed global coronavirus-led sell-off. The Dow tumbled near 1000 points as the US death toll topped 4000.
ASX futures were down 169 points or 3.2 per cent to 5055 near 7.45am AEDT. The local currency fell 0.9 per cent.
Shares on Wall Street opened lower and never recovered as news concerning the virus depressed sentiment.
President Donald Trump last night said “hard days” lie ahead; the latest White House projections predict 100,000 to 240,000 virus deaths across the US; Vice president Mike Pence said the trajectory for the US now resembles that of Italy.
In addition, there was a report that the US national stockpile of emergency equipment was nearly depleted. Florida’s Republican governor finally relented to mounting criticism to impose stricter movement measures.
Overnight market moves
- AUD -0.9% to 60.77 US cents
- On Wall St near 4pm: Dow -4.4% S&P 500 -4.4% Nasdaq -4.4%
- In Europe: Stoxx 50 -3.8% FTSE -3.8% CAC -4.6% DAX -4.4%
- Spot gold +0.2% to $US1580.79 an ounce at 1.06pm New York time
- Brent crude -6.3% to $US24.69 a barrel
- US oil -1.5% to $US20.17 a barrel
- Iron ore -1% to $US82.49 a tonne
- Dalian iron ore -2.7% to 557.5 yuan
- LME aluminium -1.8% to $US1498 a tonne
- LME copper -3.1% to $US4797 a tonne
- 2-year yield: US 0.22%
- 5-year yield: US 0.35%
- 10-year yield: US 0.57% Australia 0.65% Germany -0.47%
Good morning and welcome to Markets Live for Thursday.
This blog is not intended as investment advice.