US stocks were sharply higher on Monday following progress in the Morderna coronavirus vaccine trials and more upbeat remarks by Fed Chair Jerome Powell over the growth prospects of the US economy. The rally pushed stocks into positive territory for the month with the DOW up 3.85% while the S&P and the NASDAQ rose 3.15% and 2.44% respectively. Yield on 10Y USTs closed higher at 0.7257%.
The UK set out its post-Brexit tariff plans on Tuesday that will see some GBP 30 billion removed on supply chain imports according to the Department for International Trade. The plan will see 60% of British trade come in duty-free up from the current 47%. Tariffs on cars and agricultural products will remain, however. The pound closed firmer at $1.2194 while yield on 10Y UKTs closed higher at 0.257%.
France and Germany announced support for a bloc-wide EUR 500 billion package to help the EU recover from the COVID-19 fallout. The package would provide grants to member states and be repaid from the EU budget. The plan ran into some resistance from the more frugal northern states – Austria, Netherlands, Denmark, Sweden – which are only prepared to accept a rescue package that would give out loans. The euro closed higher at $1.0913 while yield on 10Y DBRs closed higher at -0.467%.
Asian stocks continued in the green on Tuesday amid sharp gains on Wall Street and positive early results from the Moderna COVID-19 vaccine trials. The HANG SENG led gains, up 1.90%, while the ASX and the CSI closed 1.81% and 0.81% higher, respectively. The NIKKEI also rode the optimism to close 1.48% higher despite Japan’s industrial production for March having fallen 3.7% from February figures.
Brazilian banks have offered to lower interest rates among other charges to clients as they move to stave off proposals to raise taxes on profits. The proposals, already under debate in Senate, would see taxes on bank profits more than double from the current 20% to 50% as well as put a cap on interest rates banks can charge on credit cards and overdrafts to 20%. The real closed weaker at 5.7162 to the dollar while BRAZIL 29s were higher, trading in the low 99s.
Zambia is seeking to restructure its debt and has stopped taking on new commercial debt according to statements by Finance Minister Bwalya Ng’andu. The remarks, made during a TV interview, mark the strongest admission yet that debt has risen to unsustainable levels. Foreign reserves were already below levels sufficient to cover external debt servicing in January and the coronavirus has only worsened the plight. The kwacha closed slightly firmer at 18.3750 to the dollar while ZAMBIN 22s were up, trading in the high 43s.