in dispersed order, pending Congress vote

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After a surge of more than 11% Tuesday for the DJIA, the New York Stock Exchange experienced a contrasting session Wednesday, ahead of the vote by the US Congress of the support plan of $ 2,000 billion proposed by the Trump administration to fight coronavirus. An agreement in principle was reached earlier today between the White House and elected officials from both the Republican and Democratic parties.

At the close, the Dow Jones index gained 2.39% to 21,200 points, after having soared the previous day by 11.37%, its largest daily increase since March 1933! The broad S&P 500 index climbed 1.15% to 2,475 pts (after + 9.38% Tuesday), but the Nasdaq Composite, rich in technological values, ended up declining slightly by 0.45% to 7,384 pts ( + 8.12% Tuesday).

Two hours earlier, the three indices were advancing more frankly, 2% for the Nasdaq and 4% for the DJIA, but the announcement of new last-minute discussions in the Senate on certain points of the “package” made investors more cautious.

Return to relative calm on the markets

As for the Vix volatility index, also called the “fear index”, it ended the day stable around 61 points, after reaching record levels above 85 last week.

Earlier in the day, European markets also rose, with the EuroStoxx 50 taking 3.13% (after + 6.5% Tuesday) and the CAC 40 climbing 4.47% (after + 8.4% Tuesday ).

On the foreign exchange market, the dollar fell for the third consecutive session, after more than a week of ascent linked to a flight to the safety of investors who left the emerging markets in a hurry to take refuge in the “King dollar”. The dollar index, which reflects its development against 6 reference currencies (euro, pound sterling, Swiss franc, Canadian dollar, yen and Swedish krona) fell on Wednesday 1.13% to 100.88 points. The euro gained 0.95% to $ 1.0890.

Yields have stabilized on the bond markets, with the 10-year T-Bond yield ending at 0.86% (+1 basis point).

Oil prices continued to rebound, welcoming the recovery plan in the United States. The price of US light WTI crude rose 2% to $ 24.49 (May futures contract on the Nymex), while North Sea Brent gained 0.9% to $ 27.39.

Finally, gold remained very volatile, falling by 1.4% to $ 1,636.50 an ounce (April futures contract), after a rebound of around 12% over the previous two sessions.

Bipartisan agreement in Washington on the $ 2,000 billion support plan

In the United States, senators were preparing to vote Wednesday evening the plan to support the American economy of 2,000 billion dollars (1,842 billion euros). Republicans and Democrats managed to agree on a compromise on the text proposed by the White House after five days of marathon negotiations. After announcing the compromise, on the night of Tuesday to Wednesday, Treasury Secretary Steven Mnuchin said that Donald Trump would “obviously” sign this text if it is adopted by Congress.

White House economic adviser Larry Kudlow said on Tuesday that the proposed support plan would work in tandem with the $ 4 trillion in additional lending capacity released by support from the Federal Reserve.

Compensation for technical unemployment still divides

In the Senate, the president of the Republican majority, Mitch McConnell, said Wednesday that “we will pass this bill today.” The plan will then be forwarded to the Democrat-majority House of Representatives. Its president, Nancy Pelosi, hinted Wednesday that the chamber would adopt the text despite some reservations.

Wednesday evening, Republican senators, however, slowed the process, criticizing a measure to finance technical unemployment, saying it encouraged workers to stay at home … Democratic Senator Bernie Sanders, also a presidential candidate, threatened to postpone the vote on the text if the Republicans do not withdraw their objections.

$ 500 billion for sectors in difficulty, $ 500 billion for households

Senate Minority Leader Chuck Schumer described the plan as “the largest bailout in American history”. He compared it to a “Marshall plan” for hospitals and health, in reference to the aid program financed by the United States and which had made it possible to rebuild Europe after the Second World War.

In detail, this plan notably provides $ 500 billion to support the industrial companies most affected by loans or grants. The air transport sector, hit hard by the crisis, will benefit from $ 25 billion in subsidies to companies carrying passengers and $ 8 billion for air freight and airport service providers, including restaurant services. The airports themselves will benefit from $ 10 billion. In addition, airlines should have access to $ 29 billion in credit.

In addition, $ 500 billion will be allocated to direct aid for Americans, which can go up to $ 3,000 per household in the form of checks sent to millions of households.

In addition, $ 350 billion will be devoted to loans to small businesses, $ 250 billion for assistance measures for the unemployed, at least $ 100 billion for hospitals and the health system, as well as additional funds for other needs. health and nearly $ 150 billion to help states and local authorities fight the epidemic.

Donald Trump is alarmed by the coming recession

For his part, US President Donald Trump was in a hurry on Tuesday to get the United States back on its feet and at work, saying that it “would love” to lift restrictions on Easter on April 12. travel and meetings taken to fight the coronavirus.

In an interview with the American channel ‘Fox News’, Donald Trump said that too prolonged confinement could “destroy” the economy of the world’s leading power. “You can destroy a country by closing it this way,” he said, saying that a “severe recession” could kill more people than the new coronavirus.

Economists are trying to assess the consequences of the pandemic on the American economy. Those of the bank JP Morgan Chase estimate that the GDP of the United States could melt by 14% in the 2nd quarter, while Goldman Sachs foresees a fall of 24% over the same period.

New York State Covid-19 Case Explosion

As of Wednesday in the United States, the Covid-19 resulted in the death of 827 people (against 696 Tuesday), with more than 60,000 cases (against 53,268 cases Tuesday), according to the count of the American university John Hopkins.

New York State is by far the most affected with 192 deaths and more than half of the country’s cases (with around 30,800 cases …) New York Governor Andrew Cuomo said on Wednesday that the federal plan included $ 3.8 billion in aid for this State but estimated that this was not enough, and that the needs amounted to “at least $ 15 billion”.

VALUES TO FOLLOW

* Boeing (+ 24.3%!) A glimmer of hope for the competitor of Airbus. As the American aircraft manufacturer is going through one of the most serious crises in its history since the 737 MAX fatal double accident, the Covid-19 pandemic has come to darken the sky over Seattle a little more. The world air transport is almost stopped, the companies fight for their survival and the postponements and cancellations of orders should follow quickly. In this context, good news could ring at the door of the aeronautical giant.

According to sources of ‘Reuters’, Boeing plans to restart production of its 737 MAX by May. The calendar still depends on the extent of the disturbances due to the coronavirus and the green light from the American authorities for the return to service of the device, still expected in mid-2020. An agency industry source said Boeing had asked some suppliers to be ready to deliver parts for MAX in April.

* American Airlines (+ 10.5%). The main American airlines jump after the agreement reached in Congress on a plan to massively revive the American economy. A program, part of which should benefit the aeronautical sector, which is undergoing the most serious crisis in its history.

* Nike (+ 9.2%) surged, the market hailing rather solid quarterly results from the Oregon-based firm. The group achieved in its third fiscal quarter (ended February) a net profit of $ 847 million or a EPS of 53 cents against a profit of $ 1.1 billion or 68 cents per share a year earlier. Revenues reached $ 10.1 billion (+ 5%) against $ 9.55 billion in consensus thanks to a 13% growth in Nike Direct, and an increase in online sales of 36%. The good performances in several key Nike markets, including North America, helped offset the impact of the Covid-19 pandemic on activity in China. The gross margin also stood at 44.3%. Given the uncertainties linked to the epidemic, the sports equipment manufacturer did not provide forecasts for the year.

* Target (-9.4%) has suspended its financial forecasts and its share buyback program and reduced its planned investments to focus on short-term customer satisfaction. Faced with the coronavirus pandemic, the retailer no longer plans to renovate only around 130 stores in 2020 against 300 hoped for previously. The group will also open fewer small format stores than previously planned. “It has become very clear that we need to be disciplined to ensure that our stores and our supply chain focus on serving our customers without unnecessary distractions,” said general manager Brian Cornell. “We will have to prioritize the flow of food, medicine and other essentials for the foreseeable future.”

* Facebook (-2.9%) announced that the coronavirus epidemic is weighing on its advertising revenue, which represents almost all of its revenue, even though more and more homebound users spend a lot of time on the social network.

* Ford Motor soared 8.9% in large volumes, after already climbing 23.4% on Tuesday. The title has now recovered more than 40%, after falling Monday to its lowest level in 11 years …



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