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Good morning. European countries continue to tentatively open back up, monetary authorities ponder their options to help the economy and two tech giants reported. Here’s what’s moving markets.
When, how and at what pace lockdowns will be eased remains top of the agenda for European governments. Germany is going to allow playgrounds, zoos, museums and churches to open, though most restrictions will stay in place in a country where the response from its leader has been in stark contrast to others. Prime Minister Boris Johnson, returning to his duties, pledged a “comprehensive plan” to start easing lockdown measures and said the U.K. is past the peak. The details of those plans will become clearer next week and, all the while, increasingly tense Brexit negotiations will continue in the background.
The European Central Bank added the latest layer of monetary policy response to the pandemic downturn, further easing funding costs for banks but declining to add to the bond-buying program. President Christine Lagarde stuck to the script but the takeaway remains that the ECB cannot solve the crisis on its own. The ECB reiterated its call for governments to provide more fiscal support. Part of that could be a push for European companies to combine to create national champions once the region emerges from the crisis, according to dealmakers at Citigroup Inc.
The scale of the task facing the U.S. government is equally daunting, with states and cities alone seeking $1 trillion in the next virus relief package. President Donald Trump is seeking a payroll tax cut but is running into opposition from both Republicans and Democrats who would prefer to send money to those out of work, with the virus now having wiped out 30 million jobs. The Federal Reserve is expanding the eligibility for its small and medium-sized business aid program and has opened the door for rescue loans to oil companies crushed by the recent mayhem in crude markets.
It may be a quiet day for earnings in Europe, but that leaves more time to scrutinize the results from two U.S. giants. Apple Inc. didn’t provide a forecast for the first time in more than a decade, raising concerns for its supply chain of chipmakers in Asia and Europe that the iPhone maker will suffer later in the year. Amazon.com Inc., while a big beneficiary of people staying home and ordering online, said it may make a loss in the current quarter due to the extra costs of ensuring deliveries run smoothly. Note also numbers from Gilead Sciences Inc., currently spending big on a potential Covid-19 treatment, and a bleak view from payments giant Visa Inc., which expects to face challenges for multiple quarters.
The sobering comments from Apple and Amazon pushed stocks in Asia lower, while most European markets are closed for a public holiday today. Oil headed for its first weekly gain in a month, but gold is set for a week in the red on more optimistic virus numbers. Insurer Allianz SE withdrew its guidance as its net income slumped and, in the U.K., house prices, manufacturing data and results from Royal Bank of Scotland Group Plc are coming up.
What We’ve Been Reading
This is what’s caught our eye over the past 24 hours.
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