Pre-Market ReviewTrump Closes Borders

Markets could see more chart action today with headlines on the US immigration policy and the massive moves on the oil price. On Monday, the WTI oil prices for May delivery dipped into negative territory settling the day at -$37.63. It is the first time oil prices turn negative and the lowest value for a rolling contract since 1946. Additionally, President Trump announced more measure in battling the Coronavirus pandemic and he closed the borders for immigration.

Of all the sharp market moves we’ve seen over the last few weeks, Monday’s chart moves on the oil price is most likely one of the most significant ones. On Monday, West Texas crude oil for May delivery settled into negative territory at -$37.63. In practice, sellers need to pay buyers to take the stuff off their hands.

So why is this happening? The global pandemic has caused a worldwide lockdown on bringing economies to a standstill. With markets virtually grinding to a halt, there is less demand for oil. During Q1 of 2020, global oil demand decreased by one third while stockpiles increased by 48%.

As oil futures approach expiry date, they tend to represent the real current market value. The May contract prices represent that due to storage running at record highs due to demand running at record lows sellers are willing to pay buyers to take it off their hands as there is nowhere to put it.

Trump is closing the borders

Monday also saw Donald Trump take action to close off the US borders to immigration with the Coronavirus worsening in the US. This move comes after he has been under public scrutiny for handling of the pandemic. Additionally, hundreds of thousands continue to protest about many states reopening and ending lockdown.

Trump is sending out mixed messages as on the one hand his Twitter account talks about ending the lockdown and siding with protesters. At the same time, he acts on border closure to stop the spread of the virus. Many see these measures as an attempt to smoothen things for the November election.

Today lots of data is due for release with the UK unemployment data for March, and retail sales in Canada. However, these reports might be ignored by the markets unless we see a massive mess in expectations. ZEW business confidence survey might be of more interest. Expectations for the headline business confidence current climate reading to come in at -77 from -43.1.

Tuesday also sees the release of some key earnings figures, most notably Netflix. Expectations for Netflix are that the company performed well during this crisis. Lockdown could well have boosted subscriber numbers across the globe as many individuals are stuck in their houses. Earnings for the FAANG giant expect $1.64 per share, which would be a substantial increase from Q4’s reading of $1.30.