Top 5 Things to Know in the Market on Friday, March 27th

By Geoffrey Smith 

Investing.com -- The U.S. overtakes China (but not yet Europe) in having the most cases of Covid-19. The Senate's $2.2 trillion economic support bill should pass the House of Representatives on Friday, although isolated rumblings of opposition suggest it's not a done deal yet. The dollar is on course for its worst week since 2009 as confidence returns to global funding markets, while the euro zone failed to agree on common bonds to fight the economic fallout and the U.K. suspended its housing market. Here's what you need to know in financial markets on Friday, March 27th.

1. U.S. overtakes China in Covid-19 cases

The U.S. has now overtaken China in the total number of confirmed cases,  with nearly 86,000, despite having only one quarter of the population. The U.S. death toll approached 1,200, still well behind the likes of China and Italy.

In a press conference on Thursday, President Donald Trump said the figures were a credit to U.S. testing and repeated his priority of restoring activity as quickly as possible, saying that “people want to get back to work.” 

Separately, the Washington Post reported that the G7 had been unable to agree on a joint communique due to the U.S.'s insistence of calling the Covid-19 virus the "Wuhan virus".

2. Senate support package due for House vote

The House of Representatives is expected to vote on the $2.2 trillion  package passed earlier this week by the Senate, despite rumblings of resistance from individual lawmakers.

Republican Rep. Thomas Massie of Kentucky told a local radio station on Thursday he would oppose allowing the bill to pass by voice vote, effectively forcing a physical vote in Washington for which it would be difficult to gather a quorum.

However, the effect of the bill and of measures taken by the Federal Reserve continues to course through global funding markets, driving the dollar index below 100 and putting it on course for its biggest weekly drop since 2009.

3. Stocks set to open lower as profit-taking kicks in

U.S. stocks are set to open lower on Friday after a breathless rally over the last three days that meets the technical definition of a new bull market.

By 7:10 AM ET (1110 GMT), the Dow Jones 30 futures contract was down 470 points or 2.1%, while the S&P 500 contract was down 2.1% and the Nasdaq 100 futures contract was down 1.8%.

The Chinese CSI 300 had earlier fallen 0.5%, not helped by a 38% drop in industrial profits over the first two months of the year, while Europe’s Stoxx 600 fell 2.7%.

4. Europe struggles, medically and financially

Europe continues to struggle with the Coronavirus, both medically and financially.

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Spain reported its deadliest day of the outbreak so far with 769 deaths on Thursday, while Italy also broke a three-day sequence in which new infections and deaths had slowed. The deterioration in Italy’s figures appear due to the virus spreading further beyond the region of Lombardy in the north.

A teleconference among EU leaders on Thursday, meanwhile, produced no further progress on coordinating the bloc’s response to the outbreak, due to a dispute over proposals to issue joint debt, led by France, Spain and Italy.

Elsewhere in Europe, the U.K. government effectively suspended the housing market due to public health concerns, a measure that rippled through the shares of realtors, banks and builders on Friday.

5. Russia keeps pressure on oil; U.S. Senators up in arms

Crude oil prices turned lower as the rally in other risk assets ran out of steam, leaving participants to focus on a mind-blowing level of oversupply in the near term. By 7:10, U.S. crude futures were down 0.1% at $22.55, while Brent was down 1.2% at $26.02

Additionally, Russia’s deputy energy minister was quoted by newswires as saying that Russia thought a fair price for oil is between $45 and $55 a barrel. That’s somewhat below the level that many western oil companies have used for their baselines in recent years, and also below what many shale producers would need to breakeven, at least in the current environment of sky-high borrowing costs.  

A group of Republican Senators, chiefly representing oil and gas producing states,  urged the administration to take action against Russia and Saudi Arabia for conducting “economic warfare” against the U.S.