Asian markets are poised to open higher as US markets extended a rally on further stimulus hopes, after the release of an awful jobless claims report.
Some 3.28 million US workers filed jobless claims last week; underscoring the challenging situation that the world's largest economy is facing after businesses have been temporarily shut in many areas to contain the spread of the virus.
The number of Covid-19 infections in the US has surpassed that of China, reaching 82,404, with a death toll of 1,178. More worrisome is the fact that the speed of the spreading doesn't seem to have been contained.
The dollar index has fallen for a fifth-consecutive day as markets continue to digest the effect of the Fed's 'unlimited QE' and trillion-dollar fiscal stimulus. A softening dollar also reflects an alleviation in the dollar liquidity crunch situation we saw last week, hence stocks are rebounding.
Crude oil prices fell 5% overnight, which is perhaps an honest reflection of the ugly fundamental picture. Global crude oil demand is forecast to fall by 15-20 million barrels per day in the months to come, as countries ground flights with reduced business activities. Goldman Sachs has said that even if Saudi Arabia and the US agree to reduce production, their efforts will perhaps be insufficient to lift oil prices significantly as demand side falls.
Yesterday, Singapore released a $33 billion fiscal package to boost the economy, after the release of a 2.2% contraction in its Q1 GDP. The additional budget focuses on saving jobs and lending strong support to the most vulnerable yet core companies, such as SIA and Changi Airport. Temasek and SIA will announce a corporate action later on, which is likely to put SIA Group in a much better position to weather through this storm. SIA is too big and too important for Singapore to fail.
Deputy Prime Minister Heng Swee Keat has said that we are facing a more difficult time compared to the 2008 subprime crisis, which is in line with recent economic forecasts. Everybody will need to prepare for a prolonged and severe economic downturn, and take this opportunity for learning and skill-upgrading, so that we remain competitive in the economic recovery.
The Singapore dollar strengthened while Mr Heng delivered his speech, suggesting that the drawing of national reserves won’t undermine SGD’s safe-haven status in an uncertain time, as Singapore has long been prudently saving and preparing for rainy days.
US unemployment claims (week on week) chart