Three Points of a Directionless Market to Watch! "Key Points and Event Schedule for April 20"

Risk-off due to the coronavirus has been somewhat anticipated, leading to a shortage of materials and a market with no clear direction continues.

Whether new materials will emerge that trigger another risk-off, or whether materials will appear that shift risk-off to risk-on, material searching is expected to continue.

As a material that could lead to risk-on, talks of treatments are starting to emerge.

Drugs such as Favipiravir and Remdesivir have appeared, and if their effectiveness is recognized, since they are existing drugs, approval is expected to be swift.

If a treatment is approved, fear of the coronavirus should retreat and economic activity should resume.

Although mostly negative news is being conveyed, I would like to keep an eye on potential turning points.

◎ Today’s Highlights

1) Crude Oil Prices

At the end of last week, WTI crude oil fell to $18.02, the lowest since 2002, and is hovering around $20 (front-month around $25).

Despite OPEC+ and the G20 energy ministers’ agreement on a production cut of 9.7 million barrels, the actual cuts are insufficient, and prices have continued to drift downward.

We will be watching to see whether prices continue to slide slowly or find a bottom.

2) Easing of Restrictions

In Europe, the spread of the coronavirus is slowing, and although gradually, moves toward lifting stay-at-home orders have begun.

Varying regions and methods of easing restrictions exist, but as easing progresses, it should lead to a restart of economic activity and a retreat of risk-off.

Pay attention to headlines about the pace of infection and restrictions easing, and statements from key figures.

3) COVID-19 Diplomacy

What awaits after the coronavirus subsides is blame over responsibility and political maneuvering using the pandemic to vie for supremacy.

Already, blame over responsibility has begun between the U.S. and China, with each side claiming the other is the source of infection.

This could lead to a second U.S.-China conflict.

Attention is on whether Europe, being pressured by the “mask diplomacy,” will align with China or the United States.

Also of interest is whether China will dominate United Nations agencies by halting WHO funding, and how Europe will respond to U.S. actions.

◎ Today’s Event Schedule

April 20 (Monday)

07:45 NZD: NZ Consumer Price Index (CPI)

08:50 JPY: Trade Balance

17:30 GBP: Holden BOE External Monetary Committee member speech

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