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The eurozone economy contracted at a record rate in the first three months of the year and inflation slowed sharply as much economic activity in March came to a halt because of the COVID-19 pandemic. Economic output in the 19 countries sharing the euro currency in January-March was 3.8% smaller than in the previous three months - the sharpest quarterly decline since the time series started in 1995. France’s GDP fell 5.8%, Spain’s by 5.2%, Italy’s 4.7% and Belgium’s by 3.9%. European shares fell from seven-week highs after the European Central Bank (ECB) held back on big policy moves. The ECB added the latest layer of monetary policy response to the pandemic downturn, further easing funding costs for banks but declining to add to the bond-buying program. President Lagarde reiterated her call for governments to provide more fiscal support. EUSTX 50 shed some recent gains following the release, trading now at 2844.
The euro stabilised against the U.S. dollar this morning, having brushed off expected negative GDP data and rallied the day before to a two-week high on month-end flows and on news that the European Central Bank will make loans to banks even cheaper. The euro was last up 0.1% at $1.0957.The U.S. dollar was down slightly against the Japanese yen as well, trading just below 107 yen, though the other risk-sensitive currency - the Australian dollar - fell by 1% to 0.6444, its weakest since Tuesday. The oil-sensitive Canadian dollar fell around 0.5% to 1.4040 against the greenback. Sterling gave up some of the gains it made the day before, trading down 0.4% against both the dollar and the euro, at $1.2556 and 87.29 pence respectively.
World equity benchmarks dipped before closing their best month in 11 years as a rebound in oil prices, encouraging early results from a COVID-19 treatment trial and expectations of more government stimulus helped ease the pain of February and March. Safe-haven assets including the dollar and government bonds were little changed, reflecting an unsettled market weighed down by concerns about containing the coronavirus outbreak and worse than expected jobs data in the United States. More than two dozen U.S. states moved ahead with plans to relax restrictions on business and social life, hoping to reverse the economic blows of the coronavirus that led to another 3.89 million Americans filing jobs claims last week. US30 fell to 23882, the S&P 500 to 2,848 and NAS100 dropped to 8760.
Prime Minister Boris Johnson said Britain was now past the peak of its coronavirus outbreak and promised to set out a plan next week on how the country might start gradually returning to normal life following the tracks of its European peers. Britain has the second-highest official COVID-19 death toll in Europe with 26,771 deaths. Defending his handling of the outbreak, Johnson said the death toll could have been a lot worse. A first review into the lockdown will come before May 7. Meanwhile, Spain recorded its lowest daily coronavirus death tally in six weeks but the economy shrank by the widest margin on record in the first three months of the year. In Germany, museums, exhibitions, memorials, zoos and botanical gardens can reopen, provided they can fulfil social distancing and hygiene requirements.
