Top 5 Things to Know in the Market on Tuesday, April 14th

By Geoffrey Smith 

Investing.com -- President Donald Trump ramps up the pressure on governors to reopen their economies, while Spain and Italy take the first tiny steps to reopening theirs amid signs that the Covid-19 pandemic has peaked there. France and India extend their lockdowns until May, and Germany and the U.K. are expected to follow later in the week. Oil prices fall, unconvinced by the OPEC+ deal at the weekend to cut supply, and JPMorgan (NYSE:JPM) and Johnson & Johnson will kick off what's likely to be a rollercoaster Q1 earnings season. Here's what you need to know in financial markets on Tuesday, April 14th. 

1. Europe's big 3 set to extend lockdowns as Spain, Italy start reopening

The European countries worst hit by the Covid-19 outbreak, Italy and Spain, started to lift their restrictions on non-essential business amid signs that the virus has peaked there. Both economies, however, remain largely closed.

Europe’s three biggest economies, however, are set to remain in near total lockdown for at least a couple more weeks, however. France extended its quarantine order through May 11 on Monday, and German Chancellor Angela Merkel is expected to do likewise after a teleconference with state governors on Wednesday. The U.K., meanwhile, is preparing to extend its lockdown for another three weeks on Thursday, according to The Times of London.

Prime Minister Narendra Modi also extended India’s lockdown for another two weeks, until May 3, while Russia posted its biggest daily rise in new cases and deaths to date.

2. Trump raises pressures on governors to restart economies

President Donald Trump urged U.S. state governors to speed up their preparations to reopen their economies, giving a veiled warning that he would try to overrule them if they didn’t.

Trump told his daily news briefing that he had “total authority” as regards economic management of the pandemic, but failed to give an answer when challenged that the Constitution grants the presidency no such power explicitly – and that all powers not conferred on the federal government remain with the states.

Two groups of states, on both the east and west coasts of the U.S., have said they will work on coordinating the lifting of lockdown measures.

3. Stocks set to open higher; dollar falls, gold rises

U.S. stocks are set to open higher, reversing the losses they made in relatively thin trade on Monday while European markets were closed.

By 6:15 AM ET (1015 GMT), the Dow Jones 30 Futures contract was up 297 points, or 1.3%, while the S&P 500 Futures contract was up 1.1% and the Nasdaq 100 futures contract was up 1.4%.

European markets reopened higher after the Easter holiday but pared gains to trade mixed by midday in Europe. Chinese and Japanese markets rose broadly, helped by data showing that Chinese exports and imports fell by less than expected in March.

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Elsewhere, the dollar index edged down below 100 as markets continued to digest the Fed's pre-Easter stimulus package. That's also supporting gold futures, which are on course for their highest close in nearly eight years.

4. Get ready for a wild Q1 earnings season

JPMorgan and pharma giant Johnson & Johnson (NYSE:JNJ) kick off what could be the weirdest earnings season ever, reflecting the challenges of portraying the state of a business in the middle of the pandemic.

Both companies’ earnings will be largely historical, given that the virus didn’t start to affect the U.S. economy until March, so all eyes will be on their assessment of more short-term developments.

JPMorgan in particular will be scrutinized for how much it sets aside in provisions against loans that have either gone bad already or that are expected to go bad in the coming months. That number will also, inevitably, be a judgment on the efficacy of government and monetary measures to support the economy.

5. Oil prices fall amid doubts over effectiveness of supply cuts

Crude oil prices faltered as the deal cobbled together over the Easter weekend to cut global supply paled in comparison to ongoing reports showing the extent of demand destruction.

OPEC and its allies agreed to cut some 9.7 million barrels a day of output for the next two months, but the methods used to calculate the cut suggested that actual reductions in day-to-day output from current levels would be smaller.

By 6:10 AM ET, U.S. crude futures were down 2.4% at $21.85 a barrel, while the international benchmark Brent was down 1.2% at $31.36. The differential between the two blends, at nearly $10 a barrel, has rarely been wider.

Additionally, noted Saxo Bank strategist Ole Hansen, dated Brent (for immediate delivery) is trading $5.15 below the June futures contract.  “The OPEC++ deal has done little to alleviate the stress in the market. Also shows that it is oil with its weak demand outlook, not FED pumped stocks, that gives the correct take on the current global economy,” Hansen said.