It has been a volatile session in Europe today as equity benchmarks pushed higher in the morning, but the positive sentiment was derailed by the shocking jobs data from the US.

Europe

It now seems the markets are being dragged upwards by the US indices. The major equity benchmarks in Europe are hanging into gains in the wake of the comments from President Trump about oil.oil  

Mr Trump said Saudi Arabia and Russia could cut production by 10 million barrels per day (bpd), or more. The aggressive move higher in the oil market has boosted the likes of Royal Dutch Shell, BP and Tullow Oil. It has also helped oil field services firms – Weir Group and John Wood. There are also reports that China were taking advantage of the weaker energy prices, and adding to their stockpiles.

Carnival shares are in the red today after the company confirmed it raised $5.75 billion through the issue of debt, but the borrowings come at a high rate of interest. $4 billion senior secured notes were raised at 11.5%, and keep in mind the group were originally seeking to raise $3 billion. An additional $1.75 billion was raised from a 5.75% convertible note issuance. The fact the group are paying high rates of interest suggests there is a high level of risk attached to the loans, but it also underlines how desperate Carnival are for cash as they willing to pay through the nose for funds.

It was reported that Lufthansa are in talks to secure billions of euros in state aid, and it is possible the German government might take an equity stake in the business. The stock has fallen to its lowest level since 2009, so the airline doesn’t have a huge amount to bargain with when it comes to brokering a deal with the Berlin administration.

Centrica, the parent of British Gas, will now cut costs by £400 million more than previously stated. Like so many other firms, Centrica is keen to conserve its cash. The final dividend of 3.5p has been cancelled. Board members will not receive a bonus relating to 2019, and bonuses for other layers of management have been paused. The firm is in a robust position in term of liquidity as it has £600 million in cash, in addition to that, it has access to £2.7 billion in credit. The Spirit Energy disinvestment programme has been put on hold until stability has returned to the markets. This is sensible is asset prices are low, and the group is not strapped for cash.  

National Grid said their full-year performance before the pandemic was in line with expectations. In the US, the group has suspended its debt collection activity as well as its customer termination process. This might bring about an increase in bad debts. In terms of financing, the group is in a strong position as it has a credit facility of £5.5 billion When it comes to proposing a dividend, the group will take into consideration the impact of the health emergency, so it still might make a cash payment to shareholders.  

International Consolidated Airlines Group, the parent of British Airways, has cancelled its final dividend. In these times of uncertainty, cash is king, and IAG are watching their outgoings. It was reported earlier in the day the airline is in talks to suspend approximately 32,000 members of staff.

Saga have confirmed that its insurance business has been largely unaffected by the coronavirus crisis, but the travel division had been hit hard by the situation. Last month, the firm decided to suspend is cruise business until early May. In light of the uncertainty surrounding the situation, the group predicts that should the cruise business be suspended for six months that could lead to a 65% fall in revenue at the travel unit. The dividend has been suspended, and the group has drawn down £50 million from its credit facility as a precautionary move.

Aston Martin shares are in the red today as the stock has given back a lot of the ground it made yesterday when it was announced that Lawrence Stroll has a 24.99% stake in the group. Mr Stroll is heading up the consortium of investors that have stepped in to give Aston some much needed capital. Mr Stroll has deep pockets, so the car manufacturer is unlikely to go to the wall but sentiment will probably be subdued for some time.  

The push higher in copper has helped Rio Tinto, Glencore, and BHP.   

US

The mood on Wall Street has been back and forth today, but for the time being the Dow Jones and the S&P 500 are pushing higher, despite the dreadful jobless claims report. The update came in at 6.6 million – a record, it smashed the 3.5 million forecast. The US indices were given an extra lift by the surge in oil as energy stocks like Chevon and Exxon were lifted by the spike in the underlying commodity.   

Luckin Coffee shares have tanked on reports of fabricated sales in the region of $300 million. It is understood the false sales figures go back as far as the second-quarter of 2019. In a filing with Securities and Exchange Commission, the company also raised concerns about the reliability of certain costs and expenses too. In light of these developments, the company said the previous guidance could not be relied upon.   

Walgreens Boots Alliance shares sold-off after the company confirmed it had a great start to March, but then there was sharp fall-off in sales because people started staying indoors. Sales surged by 26% in the first 21 days of March as some customers were keen to stock up on items because of the health crisis. The second-quarter figures were solid as EPS came in at $1.52, topping the $1.46 forecast. Revenue ticked up to $35.82 billion, which narrowly topped forecasts. The group has now made adjustments to its businesses so it can sell some popular products in accordance with the social-distancing guidelines.  

FX

The CMC USD index continues to push higher in the wake of the abysmal jobless claims data as traders shrugged off the news. Even though the US economy has been hit hard by the health crisis, the greenback seems to be attracting safe-haven funds. EUR/USD has been pushed lower by the dollar, but it is worth noting the single currency is weaker versus the pound too. Sterling has held up well in the past couple of sessions even though there have been no major economic updates from the UK recently.

Commodities

WTI and Brent crude have surged on the comments from President Trump that Russia and Saudi Arabia could cut output by 10 million bpd, or more.  On the back of the Trump remarks, it was reported the Saudi’s have called for an emergency OPEC+ meeting. Traders are taking the view the two feuding nations –Saudi Arabia and Russia, will come to some agreement in term of lowering output.

Gold is back above the $1,600 mark despite the rally in stocks and the US dollar. Ordinarily, a firmer US dollar would hold back the gold market as the metal is traded in dollars, but that hasn’t been the case in the past two days. Gold has been broadly pushing higher since the awful jobless claims report form the US, so it appears that dealers are buying up the asset in the face of a deteriorating economic backdrop.  

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